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Construction stocks soar on policy move

By Wang Fei’er (Global Times)

08:35, May 29, 2012

Stock markets in Shanghai and Shenzhen got a boost Monday to turn around from a six-week low on expectations that China will push forward policies to curb the country's economic downturn by promoting investment in infrastructure.

The benchmark Shanghai Composite Index jumped 1.19 percent, or 27.81 points, to close at 2,361.37, and the Shenzhen Component Index shot up 2.22 percent, or 219.14 points, to finish at 10,104.10.

The two indices opened lower before climbing quickly above their five-day moving averages, thanks to a rally led by the steel, cement, machinery and railway sectors.

Over the past week, regulators and planners have repeatedly reiterated their plans to push forward new infrastructure projects following recently released figures that pointed to declining profits in the manufacturing sector.

The profits earned by the country's major industrial enterprises dropped 2.2 percent year-on-year in April, the National Bureau of Statistics reported Sunday.

By fast-tracking approvals for new major construction projects, the government has bolstered market sentiment and offset some of the fears about a prolonged slowdown in China's economy, say analysts.

Meanwhile, market confidence was further strengthened by calls from the country's regulators encouraging private capital to enter the nation's heavily monopolized public works sector.

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