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Securities stocks surge in mainland rally

By Wang Jiamei (Global Times)

08:32, May 18, 2012

Both the Shanghai and Shenzhen stock markets posted their biggest gains in two weeks yesterday on speculation that the government is working on stimulus policies to spur consumption and bolster the economy.

The benchmark Shanghai Composite Index jumped 1.39 percent, or 32.69 points, to close at 2,378.89, and the Shenzhen Component Index increased 1.64 percent, or 163.01 points, to finish at 10,079.48.

Concerns about the cooling real economy were eased somewhat by new subsidy program aimed at boosting sales of energy-saving electronics.

According to the State Council, the government will allocate 26.5 billion yuan ($4.19 billion) to subsidize purchases of household electrical appliances that meet energy-saving standards.

Also, the central government is planning a new round of stimulus policies, which will likely result in the approval of several major infrastructure construction projects, the Economic Information Daily reported yesterday.

The Shanghai Composite wavered around 2,350 points in the morning before the securities, nonferrous, property, banking and oil sectors led a rally to push the index above its five-day and 30-day moving averages in succession.

Meanwhile, the Shenzhen Component outperformed the Shanghai market, returning above the important 10,000-point mark.

The securities sector gained by more than 5 percent yesterday, making it the day's best performer, following news reports that 25 securities companies will participate in a trial leverage trading scheme next week, which will allow them to borrow funds and stocks from a centralized securities financing body to support investors' margin trading and short selling activities.

The two indices together saw 2,070 stocks gain in value, 255 lose and 148 draw even.

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