Source: Bloomberg
China’s stocks rallied the most in three weeks on speculation slowing inflation will provide more leeway for the central bank to ease monetary policy and after the government pledged to support first-time homebuyers.
Jiangxi Copper Co, the largest producer of the metal, soared 10 per cent after an economist said China may “move shortly” to help Europe resolve its debt crisis. China Vanke Co, the biggest developer, rose 2.9 per cent after the central bank said officials will increase support for building of affordable housing.
“It looks like the market is pricing in expectations about pretty low inflation, which will allow the government to relax its tight monetary policies such as a cut in the reserve- requirement ratio,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees US$285 million. “It’s still possible the government will relax its curbs on the property market to avoid a hard landing for the economy.”
The Shanghai Composite Index rose 55.63 points, or 2.4 per cent, to 2,347.53 at the close, the most since January 17. The CSI 300 Index gained 2.9 per cent to 2,528.24. The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, added 0.2 per cent on Tuesday.
Chinese consumer prices probably rose 4 per cent in January, compared with a 4.1-per cent gain in December, according to 33 economists’ estimates compiled by Bloomberg. The inflation data is due to be released on Thursday. Inflation may drop to as low as 3.2 per cent in February from a three-year high of 6.5 per cent in July, Bank of America Corp said.
Chinese officials will ensure that “loan demand from first-home families” is met, the People’s Bank of China said on its website Tuesday. A crackdown on real-estate speculation threatens to trigger a property slump in the world’s second-biggest economy. Concerns about the outlook for China’s economy have increased after the International Monetary Fund warned this week the expansion would be cut almost in half should Europe’s debt crisis worsen.
China may “move shortly” to help Europe resolve its debt crisis by providing an investment of as much as EUR100 billion (US$132 billion), said Yuan Gangming, an economist at the Chinese Academy of Social Sciences.
The money would probably go to the European Financial Stability Facility, the euro bailout fund, said Yuan, adding that the forecasts are his own and do not necessarily represent government plans. Economists from the academy provide policy advice without direct involvement in decisions.
