Chinese markets surge on stimulus expectations

China’s stocks rose on the expectation of stronger action to stimulate the economy being announced tomorrow at the annual meeting of the National People’s Congress. Nonferrous metal and property shares led the surge, on the back of higher metal prices and measures in Guangdong province to help developers.

The Shanghai Comprehensive Index rose 6.12 percent to 2198.11, the biggest gain in four months. The Hang Seng Index climbed 2.5 percent to 12331.15.

Jiangxi Copper (SH:600362; HK:00358), China’s largest producer of the metal, surged 10 percent in Shanghai and 8.73 percent in Hong Kong. Chinaclo (SH:601600; HK:02600), the nation’s largest aluminium producer, climbed 8.96 percent in Shanghai and 6.56 percent in Hong Kong. Prices of copper and other nonferrous metals rallied, on optimism that China’s consumption will rise.

Country Gardens (HK:02007), a Guangdong-based developer of residential property, surged 10.34 percent. China Vanke Co (SZ:000002), the nation’s largest developer by market value, jumped 6.5 percent. Guangdong province, where home sales fell 21 percent last year, is moving to aid developers. In addition to payment holidays, the provincial government announced on its website that it will grant equal treatment to home buyers from Hong Kong, Macau and Taiwan.

HSBC (HK:00005), Europe’s largest bank by market value, fell 4.4 percent. This follows a fall yesterday of 19 percent, its biggest since Black Monday in October 1987, after saying it plans to raise ?2.5bn by selling current investors five shares for every 12 they already own.

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