Markets

Stocks advance on property firms' rebound

By Zhang Shidong (China Daily)
Updated: 2010-06-05 09:23

China's stocks advanced, paring a weekly loss, as property developers rebounded on speculation policymakers will continue to support the industry and economic growth may be sufficient to sustain prices.

China Vanke Co rose 1.3 percent after Radio Television Hong Kong cited the developer as saying it won't cut home prices nationwide this month.

UFIDA Software Co paced gains for technology stocks for a second day, the biggest advance among industry groups on the CSI 300 Index.

Jiangxi Copper Co led declines for mining stocks, limiting the market's gains, after the world's two largest copper producers warned of lower demand for the metal because of China's plans to cool down property market.

"Signs that Chinese growth is coming off the boil are causing concern but note this is exactly what the Chinese authorities are looking for," said Shane Oliver, head of investment strategy at AMP Capital Investors, which manages $90 billion in assets. "It's likely that China will soon be able to ease up on its tightening measures."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, added 0.94, or less than 0.1 percent, to 2553.59 at the close.

About two stocks rose for each one that fell on the measure. The CSI 300 Index added 0.3 percent to 2744.39.

The Shanghai index has lost 3.8 percent this week, adding to a 22 percent decline for the year, on concern growth will slow as the housing market cools and Europe's debt crisis threatens China's exports.

Equities also fell this week on concern that a property tax will be imposed after record growth in prices in April and as manufacturing expansion slowed in May.

Property outlook

Vanke, the nation's biggest listed property developer, rose 1.3 percent to 7.28 yuan. Poly Real Estate Group Co., the second-largest, gained 1.8 percent to 10.91 yuan. Gemdale Corp, the fourth-largest, advanced 2.2 percent to 6.59 yuan.

China's economy will expand between 9 percent and 10 percent in 2010 after an "overheated" first quarter, said World Bank Chief Economist Justin Lin.

"Growth in the first quarter is a bit overheated so it would be good that the growth slows a little," Lin said.

"There is no problem" for China to maintain "9 percent to 10 percent growth", he said.

Technology gains

RBC Capital Markets said interest-rate increases may be delayed if upcoming data shows more slowing in the economy. Still, China needs to tighten policy further to reduce overheating risks and contain inflation, it said in a note.

Related readings:  China's stocks edge up - Friday  Tech stocks up on govt spending plan  China's stocks close down on profit taking - Thursday  Hong Kong stocks close 0.13% lower - Wednesday

UFIDA Software added 2.7 percent to 21.87 yuan, extending Thursday's gain of 6.4 percent. China National Software & Service Co jumped by the 10 percent daily limit for a second day, rising to 21.37 yuan. The technology index in the CSI 300 advanced 1.9 percent, the most among the 10 industries.

The government will seek to promote electronic commerce, education, networking services and other software applications, Minister of Industry and Information Technology Li Yizhong said.

Bloomberg News