Markets

Mainland stocks rise for 4th day in a row on policy outlook

(China Daily)
Updated: 2010-07-23 10:16

SHANGHAI - Mainland stocks rose for a fourth day, posting their longest stretch of gains since February, on speculation slowing economic growth will prompt the government to relax property curbs and allow for more bank lending.

Angang Steel Co led advances for steelmakers after the stock was upgraded by Standard Chartered Bank Plc. China Vanke Co rose the most in almost two weeks after the biggest listed property developer was rated "buy" in new coverage by Citigroup Inc. Aluminum Corp of China Ltd added 1.5 percent on the prospect looser monetary policies would spur metal demand.

Related readings:  China's stocks extend 4-day stretch on Thursday  China stocks end up 2.15% at 3-week closing high  China stocks close up Friday  China's stocks drop for seventh day

"Easing monetary policies is a big possibility," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. "That's probably what the government would start to do to counter the economic slowdown."

The Shanghai Composite Index climbed 27.01, or 1.1 percent, to 2,562.41 at the close, the highest since June 24. The four-day stretch of gains is the longest since the period ended Feb 12. The CSI 300 Index rose 1.2 percent to 2,781.29.

The Shanghai index has advanced 5.7 percent this week, set for the biggest weekly gain since Dec 4, on expectations the government will ease tightening measures and boost investment in low-income housing to counter a slowdown in economic growth.

The central bank has raised banks' reserve requirements three times this year and the government boosted down payments and mortgage rates for multiple-purchases of homes to curb record lending growth and asset bubbles.

The Shanghai index has fallen 22 percent this year on concern measures to control real-estate speculation and rising consumer prices will damp earnings.

Citigroup on Thursday lowered its full-year global growth forecasts for 2010 and 2011, according to a strategy report. It also cut its outlook for both years' growth in the United States, China and emerging markets, the report showed.

China's GDP growth forecast was cut by 1 percentage point to 9.5 percent, Citigroup's biggest one-month cut in the country's outlook since late 2001, the report said. The bank said China would grow at an 8.8 percent rate next year, 0.5 percentage points lower than previously forecast.

"What the market is betting now is that the government will allow the current tightening measures to be relaxed going forward," said Sun Chao, an analyst at Citic Securities Co.

China's economic expansion eased to 10.3 percent in the second quarter and industrial production cooled more than forecast in June.

Policymakers may loosen some real-estate curbs and approve more infrastructure and investment projects in the fourth quarter as growth slows toward 7 percent before picking up into 2011, Stephen Green, head of China research for Standard Chartered Bank in Shanghai, said July 15.

Angang Steel added 2.8 percent to 8.39 yuan. The stock was upgraded by Standard Chartered Bank analysts Wei Ouyang and Yan Chen, who cited a possible earnings recovery in the fourth quarter amid lower iron ore contract prices.

Baoshan Iron & Steel Co, the listed unit of China's second-biggest steelmaker, gained 0.6 percent to 6.30 yuan. Hebei Iron & Steel Co., the listed unit of the biggest steelmaker, rose 1 percent to 4.06 yuan.

The average spot price for domestic hot-rolled steel sheet yesterday climbed 2.1 percent to the highest since June 30, data from Beijing Antaike Information Development Co showed.

Aluminum Corp of China, the listed unit of nation's biggest maker of the lightweight metal, rose 1.5 percent to 9.54 yuan. Zhuzhou Smelter Group Co, China's biggest producer of refined zinc, advanced 3.1 percent to 9.61 yuan.