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Shares gain on optimism over economic reform

Updated: 2013-11-16 07:37
By Xie Yu in Shanghai ( China Daily)

Shares gain on optimism over economic reform
Chinese shares posted strong daily gains on Friday, with investors assured by the plans for unprecedented economic reform. Total turnover on the Shanghai and Shenzhen bourses increased from 158.9 billion yuan ($25.9 billion) on Thursday to 232.4 billion yuan on Friday. [Photo/ China Daily]

CSRC said to encourage listed companies to pay out dividends

China's equity market gained ground on Friday amid optimism surrounding economic reform.

The benchmark Shanghai Composite Index was up 1.68 percent, the biggest gain in a month. Turnover increased 36 percent from Thursday to 113.4 billion yuan ($18.5 billion).

Analysts said that investors took heart from media reports about a detailed reform plan, which was approved by the Third Plenum of the 18th Central Committee of the Communist Party of China. The Party meeting ended on Tuesday.

The will to pursue reform is "unprecedented", with reform in the economic sector to be emphasized, the People's Daily reported, quoting comments Friday by Yang Weimin, vice-head of the Office of the Central Leading Group on Finance and Economic Affairs.

Domestic stocks sagged earlier in the week in response to a vaguely worded communique released on Tuesday night as the Plenum wrapped up.

The document raised doubts about the government's determination to pursue deep reform, which many investors had priced in earlier. The benchmark index fell 1.83 percent on Wednesday.

Brokerage, aerospace and aviation, and tourism shares led the rally on Friday.

Citic Securities Co Ltd and Haitong Securities Co, the two largest brokerages by market capitalization, climbed 6 percent and 7 percent, respectively.

Xiao Gang, chairman of the China Securities Regulatory Commission, was reported as saying the "decisive" role played by the market in China will "usher in unprecedented opportunities for developing the country's capital markets".

The Securities Times quoted the regulator as saying that it plans to push listed companies to pay dividends.

"It seems opportunities are largely outweighing risks now. I see a lot of investment opportunities. Personally, I think it is possible that the bear market is about to end," said Xin Yu, president of Guangzhou-based Zequan Investment.

State-owned enterprises and cyclical companies will experience the impact of reform first, he said.

The nation is to give market forces a bigger role in the economy. It will also break the long-term dominance of some SOEs and force them to become more profitable.

Policymakers may also ease energy price controls while giving markets a "decisive" role in allocating resources.

Wang Tao, the chief China economist at UBS AG, said that a "decisive" role for markets means China is trying to free up prices for "the factors of production" such as labor, capital, energy and land.

 

 
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