China Stocks Rise to Highest in Month Amid Regulator Reshuffle

  • Former chief of Agbank replaces Xiao Gang as CSRC chairman
  • Property developers rally on cut in home transaction tax

China’s stocks rose to the highest level in almost a month on speculation the new head of the nation’s securities regulator will take steps to boost the world’s second-largest equity market.

The Shanghai Composite Index advanced 2.4 percent to 2,927.18 at the close, led by commodity producers and energy companies. The benchmark measure climbed 3.5 percent last week, the most in two months. Developers gained after the government said it will cut taxes on home transactions. The Hang Seng China Enterprises Index climbed to a three-week high.

Liu Shiyu takes over as chairman of the China Securities Regulatory Commission, assuming oversight of the world’s second-largest stock market in the wake of last summer’s slump that saw predecessor Xiao Gang criticized for mismanagement. Liu was previously chairman of Agricultural Bank of China Ltd. and was a deputy governor at the People’s Bank of China before that. The reshuffle comes before the nation’s Communist leaders are due to meet next week to set out a new five-year economic plan.

"Consensus in general is taking this replacement as a bullish development," said Hao Hong, Hong Kong-based equity strategist at Bocom International Holdings Co. "The market will be anticipating more supportive policies as the new chairman sets in."

World’s Worst

Trading in Shanghai was 22 percent above the 30-day average. Hong Kong’s Hang Seng Index rose 0.9 percent, while the Hang Seng China Enterprises added 1.3 percent. The Shanghai gauge is still the world’s worst performer this year after Greek and Italian equities, plunging 20 percent.

All industry groups rose on the CSI 300 index, which advanced 2.2 percent. A gauge of material companies jumped 3.8 percent as Xiamen Tungsten Co. and China Minmetals Rare Earth Co. soared by the 10 percent daily limit. Shanxi Xishan Coal & Electricity Power Co. led energy stocks higher, increasing 10 percent. In Hong Kong, Bank of East Asia jumped 9.2 percent to the highest level since Jan. 8 after Chairman David Li bought 110,000 shares, while China Unicom Hong Kong Ltd. climbed 3.1 percent after adding 5.17 million mobile subscribers in January.

Poly Real Estate Group Co. surged 3.3 percent, propelling a gauge of developers in Shanghai. The government said on Feb. 19 after the market was closed that it will cut taxes on home transactions. China will set the deed tax at 1.5 percent of the home’s value for first residences bigger than 90 square meters (969 square feet) and at 1 percent for those smaller than that size, the finance ministry said in a statement.

“Sentiment is buoyant with some positive developments,” said Clement Cheng, a Hong Kong-based trader at RBC Investment Management Asia Ltd. “The replacement of CSRC chief and tax cut on home transactions are lending some support to the market.”

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