China shares surge on economic recovery hopesComment on this story
By Clement Tan
Hong Kong - Onshore China shares jumped on Wednesday, boosting stocks in Hong Kong, as investors cheered comments from new Communist Party chief Xi Jinping that buoyed hopes for an economic recovery.
Both markets outperformed other Asian bourses after Xi, in comments ahead of the central economic planning meeting later in Decenber, listed tax reform, urbanisation and allowing the market to play a bigger role in setting resource prices as among his key priorities.
The CSI300 Index of the top Shanghai and Shenzhen listings jumped 3.9 percent, while the Shanghai Composite Index rose 3 percent to 2,034.6, returning above the 2,000-point level for the first time since November 27.
The gains helped both onshore Chinese indexes recover further from near four-year lows touched earlier this week.
The Hang Seng Index went into the midday trading break up 1.4 percent at 22,094.2, just below its 2012 intra-day high of 22,162.5, set on Monday. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 2 percent.
“We are due for a short-term bounce anyway. Xi's comments suggest he thinks the slowdown in the Chinese economy has bottomed and inflation is not going to be a big problem,” said Hong Hao, chief equity strategist at Bank of Communications International Securities.
Xi's comments on urbanisation helped Chinese property and railway stocks extend their strong gains in 2012. China Railway Group climbed 2.9 percent in Hong Kong 4.7 percent in Shanghai.
China Vanke, the country's largest developer by turnover, jumped 4.1 percent in Shenzhen to its highest since August after more than doubling sales in November from a year earlier.
Vanke is up 25 percent on the year, compared to the 5.6 percent decline on the CSI300.
In Hong Kong, property developer Evergrande soared 6.4 percent to its highest in almost five months, while China Resources Land jumped 3.5 percent, bringing its gains on the year to 67 percent.
This compares to the Hang Seng Index's 20 percent gain and the China Enterprises Index's 8 percent rise in 2012.
Angang Steel rose 3.7 percent in Hong Kong after Goldman Sachs upgraded its view from “sell” to “buy”, expecting the company to turn a profit in 2013 on higher growth in steel prices than input costs as the company seeks to cut costs. - Reuters