HONG KONG - China stocks
jumped on Monday, outperforming the rest of Asia, after the Chinese Premier Wen
Jiabao said Beijing would improve market regulation and protect investor rights
after a financial work conference over the weekend.
Wen said China must
"strengthen and improve its financial supervision and effectively prevent
systematic financial risks", calling on Saturday for a reduction of risks
from local government debt.
Gains In Shanghai came in
midday A-share turnover that was the highest since Dec. 1, a day after Beijing
cut the reserve requirement ratio for commercial lenders for the first time in
three years.
The Shanghai Composite Index
was up 1.4 per cent at 2,194.6 by midday, slightly off the day's high, with
coal issues posting the strongest gains. The Shanghai energy sub-index was a
standout outperformer, climbing 4.5 per cent.
The Shanghai Composite has
dropped almost 33 per cent over the last two years, underperforming Asian peers
as Beijing progressively tightened monetary policy to fight inflation.
"People are desperately
betting on a rebound, it doesn't need much of a reason for that to happen.
Whether or not it can be sustained is another matter," said a fund manager
at a Qualified Foreign Institutional Investor (QFII), declining to be
identified as he was not authorised to speak to the media.
Mainland media reported that
the China Securities Regulatory Commission (CSRC) was considering steps to cool
speculation on initial public offerings, including allowing institutional
investors buy more IPO shares.
While comments from the two-day
National Financial Work Conference were short of details, HSBC economists said
that in the short term, they could be taken to imply more monetary policy
easing for 2012.
"But the focus will be on
ongoing projects, public housing, rural areas and SMEs. We reiterate our call
for at least 150bp RRR cuts in the first half of 2012, with the next cut likely
in the coming weeks," said Qu Hongbin, HSBC's co-head of Asian economics
research, in a note on Monday.
Mainland investors took the
outcome of the National Financial Work Conference, held every five years, as a
sign to pour into sectors that have been most battered recently, such as coal.
Reuters
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