China Stocks Up on Rising Commodities, Foreign Economic Data

飞雪寒冰

Chinese equities rose across the board on Oct. 9, following the eight-day market closure for the National Day holidays, pushing the benchmark Shanghai Composite Index up 4.76 percent to 2,911.72 points.

Resource stocks topped the market, after commodities futures soared during the period.

Investor sentiment got a boost from better-than-expected U.S. jobless claims data and a rate rise in Australia on Oct. 6, when Chinese markets were closed.

The Reserve Bank of Australia raised its target interest rate by 25 basis points to 3.25 percent, after lowering it six times by a total of 4 percentage points since March 2008 to combat the global financial crisis.

Analysts said the rate rise signaled the bank's confidence in the global economic recovery.

Turnover in Shanghai was 95.2 billion yuan, compared with a five-day average of 80.5 billion yuan. There were no declining stocks.

The Shenzhen Component Index was up 5.3 percent to 11,801.23 points, with only three losers. Turnover was about 53.5 billion yuan, compared with the five-day average of 45.8 billion yuan.

Gold miners were the biggest gainers, after December Comex gold futures rose 3.85 percent to US$1,046.90 per ounce during the eight-day period and hit an all-time high of US$1,059.60 an ounce in intraday trading on Oct. 8.

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Shandong Gold Mining Co. (SSE: 600547), the largest domestic gold miner by revenue, climbed by the 10 percent daily limit to 64.90 yuan.

Producers of copper, aluminum, zinc and lead were also among the top risers, following strong performances of metal futures.

Ocean freight shipping firms were supported by higher freight rates, as the Baltic Dry Index, which measures rates on international shipping routes and is a key indicator of demand for raw materials such as coal, iron ore and grain, added 3.97 percent to 2,647. China Cosco Holdings Co. (SSE: 601919), the flagship company of the world's second-largest shipping group, climbed the 10 percent daily limit to 13.26 yuan.

Retailers strengthened on better-than-expected sales figures for the National Day holidays, which ran for the first eight days of the month. The Ministry of Commerce said sales rose 18 percent year-on-year.

Suning Appliance Co. (SZSE: 002024) added 5.55 percent to 17.3 yuan, after the company said sales during the holiday soared 110 percent year-on-year, partly helped by the government's "old for new appliance" program, a trade-in program that offers rebates for old appliances when consumers buy new ones.

The world's fourth-biggest home appliance maker, Qingdao Haier, surged 9.04 percent to 17 yuan on strong consumer demand.

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Meanwhile, 18 more companies approved for the Shenzhen-based growth enterprise market, officially called ChiNext, will open share subscriptions starting Oct. 13, the official China Securities Journal reported.  

Brokers were higher as investors expect the increased underwriting business from the launch of ChiNext would help their earnings. They were also supported by the government's decision to eliminate the capital gains tax for individuals, which might boost securities trading.

Sinolink Securities Co. (SSE: 600109), which underwrote two companies for the board, rose 6.1 percent to 20.19 yuan.

In contrast, bank shares lagged the market, after the country's top banking official said new lending fell in September.

New loans for the month are expected to be 300 billion to 400 billion yuan, compared with 410.4 billion yuan in August, the China Securities Journal reported, citing Liu Mingkang, chairman of the China Banking Regulatory Commission.

The third-largest lender, Bank of China (SSE: 601988), was the biggest drag on the sector, with a gain of only 2.56 percent to 4 yuan.

The market's rally "is not sustainable," wrote Shanghai Securities analyst Tu Jun in an Oct. 9 report. "Third quarter earnings will probably support the market, but we are unlikely to see surprisingly good numbers."

However, Yu Jun, head of the research department at Citic Securities, said: "Investment and consumption will continue growing at a steady pace and corporate earnings for the third quarter will be the major force driving the stock market."

Companies will start reporting third quarter earnings starting Oct. 12.

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