SHANGHAI stocks surged this morning, led by aircraft makers, shipbuilders and financials. The key Shanghai Composite Index jumped 2.06 percent to 2,289.23 points, the highest in almost seven months. The turnover was 58.8 billion yuan (US$9.4 billion) by the noon break.
Aircraft and ship manufacturers led the rally after the official China Securities Journal reported today that the central government plans to give more support to aircraft and shipbuilding industries.
Hafei Aviation Industry Co, a manufacturer of aerospace products, jumped 6 percent to 20.46 yuan. China Spacesat Co, a Beijing-based satellite application maker, soared 7.4 percent to 15.16 yuan.
China CSSC Holdings, the listed arm of the nation's biggest shipbuilder, rose 2.8 percent to 23.97 yuan. CSSC Jiangnan Heavy Industry Co, a Shanghai-based ship parts maker, climbed 4.8 percent to 14.97 yuan.
The People's Bank of China, the central bank, reiterated its prudent policies after an annual conference, putting an emphasis on balancing growth and inflation.
"We believe this means 50 bps in rate hikes in the second half due to faster inflation, and expect more yuan upside," Dariusz Kowalczyk, senior economist at Credit Agricole in Hong Kong said in a research note today. "The central bank also highlighted plans for financial market reforms, including developing the bond market, capital account convertibility, and expanding cross-boarder use of yuan."
The Bank of China, the nation's biggest foreign exchange bank, gained 1 percent to 2.96 yuan. ICBC, the world's biggest lender by assets, advanced 1.4 percent to 4.26 yuan. Shanghai Pudong Development Bank jumped 4.7 percent to 10.28 yuan.
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