Shanghai index rises on money supply increase

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

SHANGHAI'S key stock index jumped today after the government planned to boost money supply next year to bolster economic growth, adding to last month's 4-trillion-yuan (US$580 billion) stimulus package.

The benchmark Shanghai Composite Index added 0.52 percent, or 10.16 points, to 1,964.37 points at 3pm.

Gainers outnumbered losers 617 to 188.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.96 percent, or 5.62 points, to 590.36 points.

Insurers led the market higher today.

Ping An Insurance (Group) Co, China's second-biggest insurer, jumped 4.01 percent to 26.98 yuan. China Life Insurance, the biggest, added 2.49 percent to 19.79 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, gained 0.26 percent to close 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.

Shanghai Zhenhua Port Machinery Co, the world's biggest maker of container cranes, climbed 6.26 percent to 8.32 yuan.

China Shenhua Energy Co erased morning gains and lost 1.03 percent to 19.25 yuan in the afternoon session.

Shenhua'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.

M2, the broadest measure of money supply, including cash and all deposits, will increase 17 percent next year, 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.