China’s stocks rose to the highest in 11 weeks after European governments reached an agreement on a Greek aid package and investors speculated the Chinese government will adopt more measures to ease a credit crunch.
Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. (939) led gains for lenders after money-market rates declined. Jiangxi Copper Co. climbed 1.3 percent after European finance ministers awarded 130 billion euros ($173 billion) in Greek aid. Gansu Qilianshan Cement Group Co. jumped to the highest in almost three months, pacing gains among companies based in western China after the government approved a plan to accelerate the region’s development.
“There will be more policy easing and more liquidity will released into the economy,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “It still remains to be seen if these policies will be effective in stemming a slowdown in the economy.”
The Shanghai Composite Index (SHCOMP) climbed 17.8 points, or 0.8 percent, to 2,381.43 at the close, the highest since Dec. 1. The CSI 300 Index (SHSZ300) rose 0.9 percent to 2,562.45. The Shanghai Composite has rebounded 8.3 percent this year on expectations the government will ease monetary policies to bolster economic growth that cooled to the slowest pace in 2 1/2 years in the fourth quarter of 2011. The measure trades at 9.8 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
Concerns about China’s economic slowdown intensified after January data showed exports and imports falling for the first time in two years, new lending was the lowest for that month in five years and money supply grew the least in more than a decade. China’s expansion may be cut almost in half if Europe’s debt crisis worsens, the International Monetary Fund said in a Feb. 6 report.
HSBC Holdings Plc and Markit Economics are scheduled to release their preliminary manufacturing index for this month, known as the Flash PMI, at 10:30 a.m. tomorrow. It was at 48.8 in January, below the 50 threshold for expansion.
Jiangxi Copper, China’s biggest producer of the metal, rose 1.3 percent to 26.84 yuan. Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal, advanced 0.4 percent to 7.27 yuan.
Greece won a second bailout after European governments wrung concessions from private investors and tapped into European Central Bank profits to shield the euro area from a precedent-setting default.
Finance ministers awarded 130 billion euros in aid, engineered the central bank profits transfer and coaxed investor representatives into providing more debt relief in an exchange offer meant to tide Greece past a bond redemption next month.
Vice President Xi Jinping told Irish political leaders that China is “considering more involvement in helping address the European debt issue through the European Financial Stability Facility, the European Stability Mechanism and other channels,” according to comments aired by Dublin-based broadcaster RTE yesterday.
Europe is China’s biggest overseas market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
China will raise export tax rebates for some goods for the first time since 2009 this year, the China Daily reported, citing Vice Commerce Minister Zhong Shan.
The increase will be implemented at an “appropriate time” and that will be applied to “specific categories of goods” including some labor intensive products, the newspaper said. Tax rebate rates were “in general” increased to 13.5 percent in 2009 from 9.8 percent before the global financial crisis, according to the newspaper.
China will continue to implement proactive fiscal and prudent monetary policies this year as it adjusts the policies “slightly” to make them more targeted, flexible and forward looking, the official Xinhua News Agency reported yesterday, citing a statement from a meeting attended by members of the Politburo.
ICBC, the biggest Chinese lender, rose 1.4 percent to 4.46 yuan. Rival Construction Bank advanced 0.6 percent to 4.88 yuan. The seven-day repurchase rate, a gauge of funding availability in the financial system, fell 12 basis points to 5.25 percent as of 3:26 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. One basis point is 0.01 percentage point.
China cut the amount of cash that banks must set aside as reserves for the second time in three months to spur lending. Reserve requirements will fall by 50 basis points from Feb. 24, the People’s Bank of China said on Feb. 18.
“On the margin, policy will ease slightly and that will provide an additional boost to Chinese equity markets.” Manpreet Gill, senior investment strategist at Standard Chartered Plc, said on Bloomberg Television today.
The People’s Bank of China won’t sell any repurchase contracts today, according to a trader at a primary dealer required to bid at the auctions.
Qilianshan Cement climbed 4.8 percent to 10.83 yuan, the highest close since Nov. 29. Sichuan Road & Bridge Co. (600039) rose 3.9 percent to 7.82 yuan. Xinjiang Korla Pear Co. jumped 5 percent to 9.20 yuan.
The government plans to put 15,000 kilometers (9,323 miles) of new rail lines into service in western China in the five years through 2015, Xinhua reported yesterday, citing a State Council statement. The economies of the western region will expand at a faster pace than the national average in the period ending 2015, according to the statement.
China Petroleum & Chemical Corp. (600028), Asia’s biggest oil refiner, lost 0.7 percent to 7.55 yuan. Crude futures for March delivery, which expire today, advanced as much as $2.20 to $105.44 in intra-day trading, the highest price since May 5.
“Higher international crude prices certainly sparked some concern among investors that Sinopec may face big losses in refining,” Shi Yan, a Shanghai-based analyst with UOB-Kay Hian Ltd., said yesterday. “It serves as a reminder on how vulnerable Sinopec is to fluctuations in crude prices.”
--Zhang Shidong. Editors: Allen Wan, Richard Frost
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org
To contact the editor responsible for this story: Darren Boey at email@example.com