Shanghai Stocks Surge 1.8%; Policymakers Focus on Inflation

Devan Biswas
07 Mar, 2011
New York City

Stocks in Shanghai surged as investors focused on domestic economy and in Hong Kong fell after crude oil price surged to 30-month high. The policy makers at a national annual meeting focus on arresting inflation and spreading job growth and wage increase to rural areas.

[R]5:00 PM Hong Kong – Stocks in Shanghai surged as investors focused on domestic economy and in Hong Kong fell after crude oil price surged to 30-month high. The policy makers at a national annual meeting focus on arresting inflation and spreading job growth and wage increase to rural areas.[/R]

Stocks in China region closed mixed as the oil price rises and tension in the Middle East remain high. Shanghai index rose 1.8% to near four-month high on higher resource stocks but indexes in Hong Kong declined on the worries of higher inflation.

The policy makers at a national annual meeting focused on inflation and said domestic consumption will drive the economic expansion in the next five years.

Premier Wen Jiabao at the opening session of the National People’s Congress said that annual growth in the current year is expected to be 8% and in the next five years is targeted at 7%. He also said that government aims to limit the inflation to 4% in the current year and added that China is prepared to use its foreign reserves to rein in inflation.

Crude oil price is up 50% in the last eight months and investors are factoring elevated prices at least till the end of June. Standoff between Libyan army and rebels has deepened and begun to affect retail petrol prices in Europe.

Retail petro price this weekend in Italy and the Netherlands shot up to 1.67 euros a liter petrol prices.

Zhang Ping, head of power economic ministry said that China needs to shift its emphasis from “maintaining economic growth” to “ensuring and improving people’s livelihood.”

The Shanghai Composite index increased 53.90 or 1.8% to 2,996.21 and the CSI 300 index rose 2% to 3,334.51.

Hang Seng index declined 0.4% to 23,313.19.

Stock Movers

China Shenhua Energy Co Ltd jumped 3.2% in Hong Kong trading on the talks that the company is short listed for a mining operation in Mongolia. The stock in Shanghai trading increased by daily 10% limit to 28.30 yuan.

Cathay Pacific Airways Ltd declined 3.5% ahead of earnings on March 9. Crude oil prices have surged in the last six months but higher travel demand is likely to offset the recent fuel price increases.

Appliance makers rose after Premier Jiabao suggested more subsidies for rural buyers. Gree Electric Appliances Inc gained 4.5% to 22.55 yuan and Qingdao Haier Co. added 4.4% to 3103 yuan.

Resource stocks closed higher after crude oil prices and copper and gold increased. China Petroleum & Chemical Corp increased 1% to 8.81 yuan.

Cement makers resumed their advance. Anhui Conch Cement Co increased 4.5% to 37.55 yuan and Gansu Qilianshan Cement Group Co soared 6.5% to 22.35 yuan.