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Business / Markets

Equities scale new peak amid rising optimism

By Bloomberg (China Daily) Updated: 2014-11-27 08:08

Equities scale new peak amid rising optimism

An investor at a securities brokerage in Hangzhou, Zhejiang province. The benchmark Shanghai Composite Index rose 1.4 percent to 2,604.35 points on Wednesday, the highest since August 2011.[Long Wei / China Daily]

Equities in the Chinese mainland rose for a fifth day on Wednesday as financial companies rallied on hopes that an interest rate cut will boost earnings, while industrial shares gained on prospects for increased investment.

Huatai Securities Co jumped 10 percent after the Nanjing-based company's board approved a plan to list H shares.

China Life Insurance Co, the biggest insurer, surged 9.8 percent, extending to 28 percent in a five-day rally amid prospects the rate cut will boost premium growth.

China Gezhouba Group Co jumped to the highest level since February 2013 after Premier Li Keqiang said the government will encourage private investment in water infrastructure projects.

The Shanghai Composite Index climbed 1.4 percent to 2,604.35 at the close, the highest level since August 2011, while Hong Kong's Hang Seng China Enterprises Index surged 2.5 percent. Stocks have rallied since the central bank last week unexpectedly cut borrowing costs for the first time in two years to support the economy. While the People's Bank of China said the rate move does not signal a shift in monetary policy, strategists from Aviate Global LLP and Bocom International Holdings Co said the cut signals a broader policy loosening campaign that will fuel further stock gains.

"It is a bull market and the positive sentiment has spread to almost every sector such as brokerages and cyclical industries," said Wu Kan, a money manager at Shanghai-based Dragon Life Insurance Co.

"The sectors that will receive government policy support are our main focus now such as railway and water projects."

The Hang Seng Index rose 1.1 percent. The CSI 300 Index advanced 1 percent.

A gauge of financial companies in the CSI 300 added 3.3 percent for the biggest gain among 10 industry groups.

Huatai Securities resumed trading on Wednesday after being suspended since Nov 14. The firm plans to raise up to $2 billion in a Hong Kong share offering, Reuters' IFR reported Oct 28.

"The rate cuts will likely drive a rebound in interest-rate sensitive sectors in the A-share market and bring expectation for gains in the broader market, bringing positives to recent earnings performance and valuation improvement in the broker sector," CICC analysts wrote in a report.

China Gezhouba surged 6.2 percent to lead gains for industrial companies. China Railway Group Ltd climbed 1.2 percent and China Railway Construction Corp rose 1.1 percent.

China "urgently" needs private investment in public services, resources, environmental facilities and infrastructure to promote "continual and healthy" economic development, the State Council said in a statement dated Nov 16 that was published on Wednesday.

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