Shanghai Soars 7.4% on China Stimulus

123jump.com Staff
10 Nov, 2008
New York City

Stocks in Shanghai surged 7.4% and in Hong Kong gained 3.5% after China released 4 trillion yuan plan to stimulate the economy. China plan will increase infrastructure spending, remove bank limits for loans and help farmers. Metals and steel makers surged on a rise in base metal prices.

[R]6:00AM New York, 6:00PM Hong Kong - China''s stimulus package cheers Hang Seng.[/R]

In Hong Kong trading Hang Seng Index rose 3.5% or 501.20 to 14,744.63, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, advanced 9.1% or 618.26 to 7,412.85. In Shanghai trading CSI 300 Index soared 7.4% or 123.84 to 1,801.66.

Daily turnover on main board was HK$60.7 billion from HK$48.8 billion on Friday last week.

China Unveils Rmb4 trillion Stimulus Package

China''s State Council reported yesterday that it will roll out a Rmb4 trillion stimulus package over the next two years that is designed to support growth in low-income housing, rural infrastructure, water, electricity, transportation, the environment, technological innovation and rebuilding.

The package will include tax breaks and massive infrastructure spending programs that are meant to forestall the effects of the deteriorating conditions on the financial markets.

A large proportion of investments will be committed to facilitate economic restructuring, promote growth potential and spur private consumption.

China has shifted its focus from restricting growth through monetary tightening to boosting growth in the wake of deteriorating conditions in the global financial markets.

The consumer price index is expected to fall further from 4.6% in September.

Beijing will also reform value added tax, that will lower industry costs by Rmb120 billion, while commercial bank ceilings will be scrapped to encourage lending to rural areas, small enterprises and industrial rationalizations through mergers and acquisitions.

China will invest Rmb400 billion in the fourth quarter.

The State Council noted, ""As long as we take the right measures in a resolute and timely way to grasp the chance and rise to the challenges, we will surely secure steady and relatively fast economic growth.""

Gainers & Losers

China National Building Material Co. rose 42.3% and Maanshan Iron and Steel Co. surged 34.5%.

China Mobile jumped 5.4%.

Li & Fung Ltd. declined 5.8% after the company announced at the weekend that it will slash jobs and reduce expenditure and freeze hiring.

Jiangxi Copper climbed 18.6% after copper futures gained 7.5%.

China Railway Construction Corp. advanced 20.2% and China Railway Group climbed 18% and China Communications Construction rose 22.5%.

Energy stocks increased after crude oil prices for December delivery increased 5.3% to $64.3 per barrel.

CNOOC gained 9.2%, PetroChina edged up 8.2% and Sinopec Corp. increased 7.7%.

Lenovo plunged 13.5% after Morgan Stanley cut its rating to ""underweight"" from ""equal weight"" on fears the company is highly susceptible to the global financial crisis.

Financial stocks gained. China Construction Bank jumped 7.7% and ICBC increased 6%.

Aluminum Corp of China soared 19% after reporting yesterday that the company will seek shareholders'' approval to repurchase H shares in Hong Kong for 10% of the aggregate number of H shares in issue in the next year.