Chinese stocks surge on talk of government support

August 20th, 2008 - 6:35 pm ICT by IANS  

Beijing, Aug 20 (Xinhua) Chinese shares surged more than seven percent Wednesday, making their largest one-day gain in four months, amid speculation that the government would act to support the market and boost the economy. The benchmark Shanghai Composite Index jumped 7.63 percent, or 178.81 points, to close at 2,523.28. The Shenzhen Component surged 7.13 percent, or 567.58 points, to close at 8,531.15.

Aggregate turnover jumped to 65.7 billion yuan ($9.59 billion), more than double Tuesday’s 30.5 billion yuan.

Gains outnumbered losses by 825-1 in Shanghai and 676-0 in Shenzhen. More than 400 stocks rose by the daily limit of 10 percent.

Shares opened lower, tracking an overnight decline on Wall Street.

However, there was a quick turnaround for most sectors, and some saw strong gains amid speculation of market-boosting measures, said analysts.

A report by JPMorgan Chase said that the government would spend 200 billion to 400 billion yuan to bolster the economy, including tax cuts, stabilizing the capital markets and strengthening the real estate market.

In reaction to the news, China Vanke, the country’s top real estate developer, surged 8.34 percent to 7.46 yuan and Poly Real Estate, the country’s second largest developer by market capitalization, rose by the daily limit of 10 percent to 15.07 yuan.

Shares of power plants continued rising after the government announced Tuesday night that it would lift the on-grid price for coal-fired electricity by 0.02 yuan per kw/hr, effective Wednesday.

Guodian Corp. saw its shares gain 8.58 percent to 2.43 yuan and Shanghai Power rose 7.46 percent to close at 4.32 yuan.

Changhe Automobile was the only stock that fell, although its loss was very small. It edged down 0.14 percent to close at 6.94 yuan.

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