Shares jump 3.8% on hopes of drop in CPI

Shares jump 3.75% on hopes of drop in CPI


SHANGHAI stocks jumped 3.75 percent to close at a four-week high yesterday in anticipation that a lower consumer price index will ease market concern of a possible interest rate hike. The Shanghai Composite Index, which tracks yuan-denominated A shares and hard currency B shares, gained 105.60 points to 2,920.14 yesterday after advancing for a third consecutive day. Trading volume surged 20 percent to 105.8 billion yuan (US$15.4 billion) from the previous session and gainers outnumbered losers by 814 to 59 with 34 stocks unchanged. The Shenzhen Composite Index, which tracks the smaller domestic bourse, rose 27.61 points, or 3.22 percent, to end at 885.01 points. China's CPI, the main gauge of inflation in the Chinese mainland, is expected to fall to 7.1 percent in June, Shanghai Securities News reported yesterday, citing projections by industry analysts. That would represent a decline for the third consecutive month in the CPI from 7.7 percent in May and 8.5 percent in April, helping to further ease market concern of an increase in interest rate. Chen Li, an analyst at Shenyin Wanguo Securities Co Ltd, attributed the rebound to market speculation that the central government would relax its credit control. The finance and property sectors led the rally yesterday. Poly Real Estate Group Co Ltd surged to the daily cap of 10 percent to 17.28 yuan while China Vanke Co, the country's largest developer, rose 8.1 percent to 10.01 yuan. China Merchants Bank Co, the nation's fifth-largest bank by market value, gained 5.55 percent to 23.96 yuan, while Industrial and Commercial Bank of China climbed as much as 4.48 percent to 5.13 yuan. Ping'An Insurance Co rocketed 8.58 percent to 43.78 yuan. China Petroleum & Chemical Corp, the biggest oil refiner, gained 4.83 percent to 10.63 yuan.