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Shares soar on economic recovery hopes

(China Daily/Agencies)
Updated: 2009-05-05 07:51

China's stocks rose to the highest in nine months after reports that showed manufacturing expanded prompted speculation stimulus measures are working to revive the world's third-largest economy.

Baoshan Iron & Steel Co, China's biggest steelmaker, climbed 4.5 percent and China Petroleum & Chemical Corp, Asia's biggest oil refiner, gained 3.6 percent after the government said it will eliminate overcapacity in the oil refining and steelmaking industries.

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"The economic data are showing more optimism about the recovery of the economy," said Yan Ji, a Shanghai-based investment manager at HSBC Jintrust Fund Management Co. "Again, the market is quite excited about government intervention to protect the pillar industries."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, added 82.34, or 3.3 percent, to 2,559.91 at the close, the highest since Aug 8. The gain was the most since March 4. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, gained 3.5 percent to 2,714.30.

The Shanghai Composite has jumped 41 percent this year, the second-best performer among 90 global gauges tracked by Bloomberg. The measure has advanced on optimism a 4-trillion-yuan stimulus package and new loans will prevent a slump in the world's third-largest economy.

The gauge gained 4.4 percent in April as record new lending helped drive up share prices, posting a fourth monthly advance.

The nation's economy is showing "positive signs" of recovery, vice finance minister Li Yong said while attending a conference in Bali on Sunday.

The CLSA China Purchasing Managers' Index rose to a seasonally adjusted 50.1 in April from 44.8 in March, CLSA Asia- Pacific Markets said yesterday. "The figure has reiterated our belief that the economy is in recovery," said Chen Wenzhao, a strategist at China Merchants Securities Co in Shanghai. "Corporate earnings are expected to show positive earnings growth in the fourth quarter from a year ago."

Hang Seng firm

Hong Kong stocks rose, driving the benchmark index to the highest in more than six months.

The Hang Seng Index added 860.06, or 5.5 percent, to 16,381.05, its highest close since Oct 14. The Hang Seng China Enterprises Index advanced 6.1 percent to 9,641.91, its highest close since Sept 25.