Economy

China's stocks gain on hopes of easing of policy

(Xinhua)
Updated: 2010-07-20 21:57

BEIJING -- Chinese shares advanced for the second consecutive day Tuesday, pushing up the benchmark index to its highest level since June 28, as investors speculated the government will ease the tightening measures it has taken after the pace of economic growth slowed in the second quarter.

The benchmark Shanghai Composite Index gained 2.15 percent, or 53.31 points, to end at 2,528.73 points.

The Shenzhen Component Index climbed 2.40 percent, or 242.33 points, to finish 10,339.43 points.

Total turnover jumped to 205.2 billion yuan (US$30.28 billion) from 142.89 billion yuan the previous trading day.

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Winners outnumbered losers by 879 to 5 in Shanghai and 967 to 17 in Shenzhen.

The gains were mainly spurred by investor speculation the government might relax its tightening measures sometime this year, said Qin Xiaobin, analyst at China Galaxy Securities Company Limited.

Second quarter economic data indicated "an obvious slowdown," he said.

"China's stock market has lost enough on the tightening policies and concerns about further tightening before the second quarter economic data was released," he added.

Government figures show the country's gross domestic product rose 10.3 percent year on year in the second quarter, slower than the 11.9-percent growth in the first quarter.

The Shanghai Composite Index lost 26 percent in the first half of the year on concern the government's property market tightening measures would dent economic growth.

Qin expects the optimism to last for some time but that future market moves will depend upon economic data released in coming months.

China will not face an economic double-dip in the second half of the year, Zhu Hongren, a spokesman for the Ministry of Industry and Information Technology, told a conference in Beijing Tuesday.

Also contributing to the market gains was the Shanghai municipal government's announcement Monday it would provide financial aid for Shanghai-based medium- and large-sized firms to go public.

China Vanke, the country's biggest listed property developer by market value, rose 0.9 percent to 7.81 yuan. Bank of China climbed 1.73 percent to 3.52 yuan.

Shanghai Xinmei Real Estate Co. rose 9.99 percent to 9.58 yuan and Shanghai Join Buy Co. jumped 7.22 percent to 9.50 yuan.