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Overseas rally gives local stocks a boost

By Wang Jiamei (Global Times)

08:29, May 23, 2012

Both the Shanghai and Shenzhen stock markets rose for a second day yesterday on gains in the US markets as well as expectations that efforts will soon be made to bolster the domestic economy.

The benchmark Shanghai Composite Index jumped 1.06 percent, or 25.01 points, to close at 2,373.31, and the Shenzhen Component Index shot up 2.03 percent, or 202.71 points, to finish at 10,180.27.

Hopes of more monetary easing continued to offer support to the A-share market yesterday following Premier Wen Jiabao's pledge to make maintaining steady economic growth a priority.

Taking a cue from overnight gains in the Dow Jones industrial average, the Shanghai Composite opened higher before quickly climbing above its five-day moving average in the early morning. After hitting 2,367 points, the index slid back to waver around the 2,360-point level. The market showed strong upward momentum and stepped up steadily in the afternoon session to finish trading with its biggest gain in three days.

The cement sector led the rally due to growing confidence in infrastructure construction as the China Securities Journal reported yesterday that the government will accelerate approval for key public works projects. Jiangxi Wannianqing Cement Co jumped 6.49 percent to 12.79 yuan ($2.02); Xishui Strong Year Co increased 5.98 percent to 7.27 yuan; and Huaxin Cement Co gained 5.52 percent to 14.90 yuan.

Meanwhile, securities stocks also outperformed the market following news that the China Securities Regulatory Commission (CSRC) has changed its issuance and underwriting rules with a view to improving the balance between the primary and secondary markets.

The combined turnover of the Shanghai Composite and Shenzhen Component expanded 5.31 percent compared to Monday to 135.76 billion yuan. The two indices together saw 2,110 stocks gain in value, 213 lose and 154 draw even.

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