Market climbs at midday on money supply increase

By Lydia Chen  |   2008-12-15  |     ONLINE EDITION

SHANGHAI'S key stock index closed higher in the morning session after the government announced a plan to boost money supply next year to bolster economic growth, adding to last month's 4-trillion-yuan ($580 billion) stimulus package.

The benchmark Shanghai Composite Index added 0.43 percent, or 8.38 points, to 1,962.60 points at 11:30am.

Gainers outnumbered losers 560 to 219.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.58 percent, or 3.39 points, to 588.13 points.

Insurers enjoyed a good morning. Ping An Insurance (Group) Co, China's second-biggest insurer, jumped 3.93 percent to 26.96 yuan. China Life Insurance, the biggest, added 2.59 percent to 19.81 yuan.

Ping An said its life insurance unit completed the increase of its registered capital to 23.8 billion yuan from 3.8 billion yuan.

China Petroleum & Chemical Corp, Asia's biggest oil refiner, edged up 0.26 percent to finish the session at 7.83 yuan. The company, also known as Sinopec, had its stock rating cut to "neutral" from "buy" by UBS AG. The brokerage also reduced Sinopec's price target to 8.90 yuan from 9.70 yuan.

China Shenhua Energy Co's profit will rise next year because of a potential increase in contract prices for the fuel, Chief Financial Officer Zhang Kehui said in Beijing on Saturday. The stock inched up 0.15 percent to 19.48 yuan.

M2, the broadest measure of money supply, including cash and all deposits, will increase 17 percent, the State Council said in a statement yesterday. The government will also suspend the issue of three-year central-bank notes and aims to increase total financial-institution lending by 4 trillion yuan this year, it said.

The government will "take effective measures to stabilize the stock market," the statement said, without giving more details.