Rate cut speculation boosts Shanghai stocks

By Pan Xiaoyi  |   2008-12-16  |     ONLINE EDITION

SHANGHAI'S key stock index ended higher today on speculation of another interest rate cut.

The Shanghai Composite Index added 0.54 percent, or 10.63 points, to 1975.01 points at 3pm, after reaching an intraday low of 1,907.83 points.

Gainers outnumbered losers 602 to 235 while 32 remained unchanged. Turnover shrank slightly to 52.8 billion yuan (US$7.76 billion), compared with 55.2 billion yesterday.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 1.93 percent, or 11.39 points, to 601.76 points.

People's Bank of China Governor Zhou Xiaochuan said he sees pressure to cut interest rates between now and the beginning of January as growth slows due to a collapse in exports.

Shares opened lower after investment spending slowed in the first 11 months.

The National Bureau of Statistics said today fixed-asset investment in urban areas rose 25.8 percent in the first 11 months year on year to 12.76 trillion yuan ($1.9 trillion), slower than 27.2 percent between January and October and 27.6 percent in the first three quarters.

According to the State-owned Assets Supervision and Administration Commission, the country's 143 central-owned enterprises saw combined profit drop 26 percent in the first 11 months on rising inventories.

But a broad rebound pushed the index up in the minutes before the market closed.

Real estate developers led the gains on a possibility of a looser policy for second-hand home purchases.

China Vanke Co, the country's largest publicly listed property developer, advanced 5.28 percent to 7.58 yuan. Shanghai-based Shimao Property Co added 1.25 percent to 7.31 yuan. Gemdale Corp, a Chinese partner of ING Group NV, increased 5.87 percent to end at 8.29 yuan.

Poly Real Estate Group Co, China's second-largest developer by market value, rose 7.25 percent to 18.34. Poly said its 11-month sales rose 28 percent to 2.35 million square meters valued at 18.74 billion yuan.