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GDP data gives A-shares a boost

By Louise Ho (Global Times)

08:25, January 21, 2013

Stock markets in Shanghai and Shenzhen surged Friday as property shares rallied and annual economic growth data beat official projections.

The Shanghai Composite Index ended last week at 2,317.07 after rising 32.16 points, or 1.41 percent Friday; while the Shenzhen Component Index gained 123.07 points, or 1.32 percent, to finish at 9,432.30.

The Shanghai Composite and the Shenzhen Component were up 3.30 percent and 4.60 percent week-on-week respectively by the close of trading Friday.

The markets began last week with a bang after the head of the China Securities Regulatory Commission (CSRC) said last Monday that quotas for the country's Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) programs could be lifted by up to 10 times their current levels. This news, along with strong gains from the environmental protection and aviation sectors, lifted A-shares last Monday and Tuesday. The markets snapped their winning streak Wednesday amid profit-taking and plunges in financial and property shares. Thursday saw the markets lose ground again as aviation and shipbuilding stocks relinquished gains from earlier in the week.

Both stock markets opened higher Friday but drops in liquor producers dragged down the indices in the morning following news that top baijiu brand Wuliangye Yibin Co is under investigation for violating anti-trust laws. Wuliangye Yibin Co dropped 1.851 percent to 27.58 yuan ($4.43). Kweichow Moutai Co shed 0.67 percent to 203.76 yuan.

The markets recovered after the National Bureau of Statistics announced that China's gross domestic product for 2012 increased 7.8 percent year-on-year, the slowest growth pace in 13 years but still ahead of the country's official year-long growth target of 7.5 percent. Overall, investors reacted favorably to the data, which strengthened views that the broader economy was pulling out of its recent slump, said analysts.

Gains in property stocks added further fuel to the markets. The Shenzhen government announced Friday that more land in the city would be earmarked for industrial development. Shenzhen-based Shahe Industrial Co rose by the 10-percent daily limit to 9 yuan. Meanwhile, the agricultural sector benefited from speculation that the first government working paper focused on agricultural reform will be released later this year. Shandong Yisheng Livestock & Poultry Breeding Co added 7.27 percent to 10.92 yuan.

The market is expected to enter a moderate adjustment period where it will fluctuate by between 100 and 200 points before the Chinese New Year, but there could be another rally in store before the annual parliamentary meetings in March, according to a China Business News report Saturday, citing Liu Qiyuan, an analyst from Qilu Securities.

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