2010-06-10 11:00

Volume up about 50 percent from a year earlier, new loans hit $92b

SHANGHAI - China's stocks rose the most in more than two weeks as Reuters reported a surge in the nation's exports in May and higher-than-estimated new loans, signaling Europe's debt crisis hasn't derailed economic growth.

An investor watches share prices at a brokerage in Huaibei, Anhui province. The Shanghai gauge has lost 21 percent this year, becoming Asia’s worst performer, on concerns the authorities will tighten policy excessively.[XIE ZHENGYI / FOR CHINA DAILY]

Bank of China Co advanced 3.4 percent and Jiangxi Copper Co added 3 percent. Exports grew about 50 percent from a year earlier and new loans were 630 billion yuan ($92 billion), Reuters said, citing three unnamed people who said a government official unveiled the figures at an investor conference on Wednesday. The statistics bureau declined to comment.

The Shanghai Composite Index climbed 2.8 percent to close at 2583.87, reversing a decline of as much as 0.5 percent and set for its biggest gain since May 24. The Shanghai gauge has lost 21 percent this year, Asia's worst performer, on concern policymakers will tighten policy excessively even as Europe's debt crisis slows growth in China's biggest export market.

"If we assume that these numbers are pretty close to what we're going to get, then it's fairly good news for China's recovery and should dispel some of the concerns about a very sharp slowdown in the Chinese economy," said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada.

The CSI 300 Index rallied 3.1 percent to 2782.13, with an index tracking financial stocks surging 4.3 percent, the most since Dec 4, 2009.

The median estimate of 32 economists surveyed by Bloomberg News was for 600 billion yuan of new loans and a 32 percent increase in overseas shipments.

Monetary policy

The loan figure "is far more than our estimates", said Jacky Zhang, stock analyst at Capital Securities. "It shows the government may adopt a relatively easier monetary policy in the second half."

Reuters also reported consumer prices rose 3.1 percent in May, citing the same unnamed people. Economists forecast a 3 percent gain in consumer prices.

Bank of China jumped 3.4 percent to 3.63 yuan, snapping a five-day losing streak. China Citic Bank Corp rose the 10 percent daily cap to 5.51 yuan. Jiangxi Copper Co added 3 percent to 28.39 yuan.

An index measuring financial stocks has tumbled 27 percent this year, the third worst among the CSI 300's 10 industry groups, as the government ordered banks to hold more of their assets in reserve, set a lower lending target for 2010, and drained liquidity through bill sales. Regulators have also restricted mortgage lending and raised down-payment requirements for home purchases.

Lenders have also declined on concern Europe's sovereign debt crisis will harm economic growth and fundraising will dilute shareholders' stakes.