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China shares gain, premier says stimulus working
AP - Tuesday, April 21
SHANGHAI - Chinese shares rose to a new eight-month high Monday, after Premier Wen Jiabao said Beijing's stimulus spending was showing results.
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The benchmark Shanghai Composite Index rose 53.52 points, or 2.1 percent, to close at 2557.46. The Shenzhen Composite Index for China's smaller second exchange crept up 2.3 percent to 864.79.
Investors were optimistic after Premier Wen Jiabao, speaking at a weekend economic forum, said Beijing's stimulus spending was showing a "better than expected" result, analysts said.
They said sentiment was also boosted by banking regulator Liu Mingkang's weekend comment that bank lending this year would not be limited to the 5 trillion yuan ($731 billion) the government has cited as a goal. The flood of liquidity in the market has been pushing up stocks since the start of the year.
"The sentiment in the market is good, and the officials' remarks sent positive news to banks, heavyweights of the market. It also means the expectation of liquidity growth still exists," said Huang Xiangbin, analyst for Cinda Securities in Beijing.
Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, jumped 1.2 percent to 4.16 yuan. China Construction Bank Ltd. gained 1.3 percent to 4.53 yuan. Midsize lender Pudong Development Bank Ltd. rose 2.3 percent to 22.54 yuan.
Airlines jumped after tickets prices were raised Monday following reports of heavy 2008 losses for state-owned carriers. Air China Ltd. soared 8.6 percent to 7.29 yuan and China Southern Airlines Ltd. advanced 5.9 percent to 6.33 yuan.
Tourism-related shares gained ahead of the May Day holiday on expectations of more travel. China CYTS Tours Holding Co. gained 5.1 percent to 12.28 yuan, while Beijing Capital Tourism Ltd jumped 5.8 percent to 18.68 yuan. Shanghai Jin Jiang International Industrial Investment Co. shot up 5.4 percent to 12.96 yuan.
In currency markets, the yuan weakened to 6.8330 to the U.S. dollar, down from Saturday's close of 6.82927.
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