China’s Stocks Gain on Government Plan to Increase Spending
China’s stocks rose, as a government plan to increase consumer spending overshadowed reports that manufacturing contracted by a record last month.
Sichuan Changhong Electric Co., a maker of television sets, surged 9.9 percent after the government said it will expand a plan to subsidize household appliance purchases by farmers. GD Midea Electrical Appliances Co. jumped 10 percent. China Merchants Property Development Co. gained 5.5 percent after the real-estate builder raised 5.94 billion yuan selling additional shares to finance 14 new projects.
“On the one hand you have the stimulus package and measures to boost consumption, on the other hand you continue to get weak numbers,” said James Liu, deputy chief investment officer at APS Asset Management in Shanghai, which oversees about $1 billion. “Investors have discounted a large part of the slowdown in manufacturing and are now anticipating more measures to boost the economy.”
The CSI 300 Index, which tracks yuan-denominated stocks traded in Shanghai and Shenzhen, rose 34.28, or 1.9 percent, to 1,864.20 at the close, with about 10 stocks advancing for each that declined. All 10 industry groups on the index climbed.
The measure has lost 65 percent this year, as the worst financial crisis since the Great Depression sent the economies of the U.S., Japan and Europe, China’s largest trading partners, into recession. The government last month announced a 4 trillion yuan ($586 billion) stimulus package and the biggest interest- rate cut in 11 years to revive the economy and counter the risk of spiraling unemployment and social unrest.
Farmer Subsidies
Sichuan Changhong Electric gained 9.9 percent to 3.43 yuan. GD Midea Electric Appliances Co. added 10 percent, the daily maximum, to 9.08 yuan, after increasing its stake in Wuxi Little Swan Co., a washing-machine maker. Qingdao Haier Co., an air- conditioner maker, advanced 3.5 percent to 9.27 yuan. Gree Electric Appliances added 2.9 percent to 18.58 yuan.
Farmers in 14 provinces, starting today, can buy selected TV sets, refrigerators, washing machines and mobile phones at a 13 percent discount, according to a statement, dated yesterday, on the ministry’s Web site. Previously, only Qingdao city in eastern Shandong and another three provinces were included in the program aimed at boosting rural consumption.
The CLSA China Purchasing Managers’ Index fell to a seasonally adjusted 40.9 in November from 45.2 in October, CLSA Asia-Pacific Markets said today in an e-mailed statement. A government-backed survey, released today, also showed a record contraction. Export orders, output and new orders all shrank by the most since the surveys began.
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