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Mainland markets get nudge from US Fed move

By Yu Xi (Global Times)

08:31, September 17, 2012

Chinese stock markets notched solid gains Friday after the US Federal Reserve unveiled a much-anticipated third round of quantitative easing.

The Shanghai Composite Index finished trading at 2,123.85 points Friday, up 13.47 points, or 0.64 percent on the day; while the Shenzhen Component Index wrapped up last week at 8,740.05 points after climbing 49.05 points, or 0.56 percent.

Both mainland markets kicked off last week on a positive note in large part thanks to gains in construction-related stocks amid speculations that the government would push forward more infrastructure and public works spending in the second half of the year. Drops in the heavily weighted cement, machinery, coal, real estate and environmental protection sectors dragged down markets Tuesday as new projects failed to materialize. Markets crept up again Wednesday as investors took heart in statements made by Chinese Premier Wen Jiabao the previous evening that the government would give greater priority to stabilizing economic growth. The gains were short-lived though, as downward shifts in cement and heavy equipment stocks pushed markets back into negative territory Thursday.

Mainland equities once again reversed direction Friday, this time picking up steam from the Federal Reserve's announcement that it will roll out a new round of easing in order to strengthen the US economy. Gold, non-ferrous metal, rare earth, coal and cement stocks placed among the biggest gainers Friday.

Shandong Gold Mining Co surged 5.31 percent to 39.68 yuan ($6.27) Friday, while Zhongjin Gold Corp went up 6.71 percent to 16.39 yuan.

Despite Friday's victory and the arrival of a long-awaited additional round of quantitative easing from the US Fed, without more liquidity, the chances of a long term rebound at the mainland exchanges is slim, say analysts.

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