Shanghai Index Gain; Grain Output Surges 3%

Chandrasekhar Atreya
06 Dec, 2010
New York City

China stocks fluctuated but closed higher whereas Hong Kong index edged lower. Central Bank advisor urged China to boost its gold reserves and diversify currency reserves. Grain output in China surges 2.9% till November from a year ago period.

[R]5:00 PM Hong Kong, China – China stocks fluctuated but closed higher whereas Hong Kong index edged lower. Central Bank advisor urged China to boost its gold reserves and diversify currency reserves. Grain output in China surges 2.9% till November from a year ago period.[/R]

Stocks in Shanghai fluctuated and at close gained but the index in Hong Kong edged lower. The fears of immediate lending restrictions and higher rates receded after the U.S. reported lower than expected jobs growth in November.

The Shanghai Composite Index gained 0.52% or 14.75 to close at 2,857.18. The CSI 300 Index added 0.23% or 7.41 to close at 3,165.57.

The Hong Kong stocks fell but coal and energy stocks closed higher. The Hang Seng Index lost 0.36% or 82.83 to close at 23.237.69.

China should consider boosting its gold reserves and revise management of its foreign reserves as a long-term strategy to pave the way for globalization of yuan, wrote central bank advisor Xia Bin in a report on Friday.

“Holding gold as the basis of solvency has been used throughout history to support the rise of a strong global currency. Also having a corresponding amount of solvency is a necessary pre-condition and indispensable safeguard in the long-term strategy for the yuan’s globalization,” said Xi.

China’s grain output to November was 546.61 million tons, up 2.9% from a year ago period and increased for the seventh year in a row of growth, according to data collected by the National Bureau of Statistics and released on Friday.

The preliminary figures were from a sample survey done in 31 provincial level regions on the Chinese mainland, the bureau said in a statement on its Web site.

China may raise the reserve ratio requirement of the banks at the beginning of 2011 to curb inflow of capital as well as control lending rates, central bank advisor Li Daokui said on Friday.

Commenting immediately after the announcement of shift in monetary policy by the government he said that interest rates will be raised gradually and policy makers will also study global economic conditions before taking these steps.

China will cancel the preferential purchase tax now in force for vehicles under 1.6 liters from January 1, according to Xiaoxiang Daily News.

Stock Movers

Gold miners led the gainers after gold bullion prices rose to a three week high.

Shandong Gold Mining Co gained 3% to 55.10 yuan and Zhongjin Gold Corp added 2.6% to 40.16 yuan. Zijin Mining Group Co, China’s largest gold producer, gained 1.7% to 8.42 yuan.

Brokers gained as trading turnover on mainland China stats robust. China Merchants Securities gained 3% to 21.18 yuan. GF Securities jumped the daily limit of 10% to 50.09 yuan and CITIC Securities rose 4.4% to 13.74 yuan.

Shandong Uroica Automatic Equipment tumbled 6.2% to 104 yuan. Wuhan Zhongyuan Huadian Science & Technology Co similarly lost 5.7% to 23.60 yuan as the two companies issued profit warnings.