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Chalco Gains by Limit on China Market Investment: Shanghai Mover

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March 21 (Bloomberg) -- Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, surged by its daily limit in Shanghai after reports the government will boost investments in the stock market and regulate rare-earth output.

Aluminum Corp., known as Chalco, advanced 10 percent, the most since Jan. 17, to close at 7.59 yuan. The company’s shares in Hong Kong rose 1.1 percent to HK$3.83.

As much as 40 percent of Guangdong province’s 100 billion yuan ($15.8 billion) of pension funds may be invested in stocks, the 21st Century Business Herald reported today. The government will increase punishment for excess production of rare earths and also encourage the formation of large producers, China Central Television reported yesterday, citing the Ministry of Industry and Information Technology.

“Cyclical stocks, like Chalco, usually react quickly if the market has increasing capital,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “News that the government will regulate rare-earth mining also fuels speculation such measures will benefit large producers.”

Chalco’s parent, Aluminum Corp. of China, took over five rare-earth companies in the eastern province of Jiangsu in June to boost capacity. Chalco Chief Executive Officer Xiong Weiping plans to diversify into rare earths, coal and iron ore as profit margins for its aluminum production shrink. The parent company has yet to transfer the rare-earth assets to Chalco.

China, the world’s second-largest economy, has set export limits on rare earths and minor metals, including molybdenum and tungsten, to conserve resources and protect the environment. Other stocks also gained after the reports.

Jinduicheng Molybdenum Co., China’s biggest producer of the metal by value, climbed 7.1 percent to close at 15.48 yuan in Shanghai. Xiamen Tungsten Co. gained 4.5 percent to 47.77 yuan.

China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. advanced 0.9 percent to 25.45 yuan in Shenzhen. The benchmark Shanghai Composite Index rose 0.1 percent.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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