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Optimistic investors lift index to close up

(Shanghai Daily)

08:56, December 08, 2011

Shanghai's key stock index rebounded yesterday from its six-week low as investor sentiment improved on hopes that the upcoming European Union leaders' summit will yield results and also on the pending release of China's Consumer Price Index.

The Shanghai Composite Index edged up 0.3 percent to close at 2,332.73 points, regaining ground from its two straight daily losses.

After Standard & Poor's warned of credit downgrades in 15 EU nations, investors expected European leaders to step up their efforts to end the rising and contagious sovereign debt crisis by pushing for a closer fiscal union at the summit later this week.

The market was also boosted on expectations that China's inflation for November, due out tomorrow, may ease to below 5 percent to probably reach the lowest level this year.

"The consumer prices in November probably increased 4.2 percent from a year earlier, and dropped 1.2 percent from last month," said Lu Zhengwei, chief economist at the Industrial Bank.

Financial shares led the rise. Ping An Insurance Group jumped 3 percent to 37.92 yuan (US$5.98). China Merchants Bank advanced 1.1 percent to 11.89 yuan. The Agricultural Bank of China gained 0.4 percent to 2.57 yuan. China Citic Bank rose 1.2 percent to 4.14 yuan.

Property developers were mixed as the extended restrictions on house purchases painted an uncertain outlook for their cash flow despite the reserve requirement ratio cut for banks that took effect on Monday.

Poly Real Estate Group, China's second-largest developer by market value, rose 0.5 percent to 9.93 yuan. Jiangxi Zhongjiang Real Estate Co fell 0.2 percent to 6.76 yuan.

Wang Tao, chief economist at UBS Securities, said he expects more loosening of monetary policies in the first quarter next year.

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