- Chinese leadership signals fiscal measures, property support
- Drug and phone stocks fall after outperforming broader index
China’s stocks rose to a four-month high after the nation’s leaders signaled at an economic meeting that they will take further steps to support growth.
The Shanghai Composite Index climbed 0.3 percent to 3,651.77 at the close, the highest level since Aug. 20. Jiangxi Copper Co. and Anhui Conch Cement Co. led gains for material producers and property developer Gemdale Corp. surged to a record high after the Central Economic Work Conference concluded with plans to increase fiscal spending and measures to stimulate the housing market.
“The top has come up with growth-boosting measures,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “That’ll probably stabilize the economy. The market is likely to be range bound as we approach the new year holidays.”
The Shanghai gauge has rallied 20 percent this quarter, heading for the biggest gain among global benchmark measures tracked by Bloomberg, after the government took unprecedented measures to stabilize equities following a $5 trillion rout earlier this year. Policy makers have allowed initial public offerings to resume since the selloff, while some other drastic measures such as banning major shareholders from selling their stakes for six months expire in early January.
Monetary policy must be more “flexible” and fiscal policy more “forceful” as leaders create “appropriate monetary conditions for structural reforms,” according to statements released at the end of the meeting by the official Xinhua News Agency on Monday. It said the fiscal-deficit ratio should be raised gradually. Reducing home prices is part of efforts to cut inventory, while out-of-date restrictions on home ownership shall be removed, Xinhua said.
The government’s annual growth target is typically set at the gathering, though not announced. President Xi Jinping has previously suggested the nation must meet a minimum annual average growth pace of 6.5 percent through 2020. The growth target this year was for a rate of about 7 percent. Even meeting that, China would see its weakest expansion since 1990.
The CSI 300 Index added 0.3 percent. Hong Kong’s Hang Seng China Enterprises Index fell 0.2 percent, while the Hang Seng Index rose 0.2 percent.
Anhui Conch led gains for material shares, jumping 2.8 percent. Jiangxi Copper advanced 1.4 percent after people with knowledge of the matter said China’s largest smelters may lower output by more than the 350,000 metric tons already announced if their profitability deteriorates. Gemdale soared 8.7 percent, helping to propel the Shanghai property index to a four-month high.
Shenzhen Click Technology Co. and Jiangxi Fushine Pharmaceutical Co. were among six companies that surged by the daily limit of 44 percent in their first day of trading. Eight firms will be selling IPO shares on Wednesday and Thursday. The offerings may freeze as much as 1.6 trillion yuan ($246.9 billion), the Shanghai Securities News reported, citing China Merchants Securities Co.
Sub-indexes of phone and pharmaceutical stocks dropped at least 0.4 percent for the biggest losses among the CSI 300’s 10 industry groups. The two groups along with technology have gained at least 34 percent this year for the best performances in the stocks gauge. ZTE Corp., China’s second-biggest phone-equipment maker, sank for the first time in four days, dropping 1.6 percent. Traditonal Chinese medicine maker Dong-E-E-Jiao fell 1.5 percent, while Yunnan Baiyao Group Co. slid 0.9 percent.
— With assistance by Shidong Zhang