6-month Stock Jump Highest in 17 yrs

Source: Shenzhen Daily

China's stocks rose yesterday, driving the benchmark index above 3,000 points for the first time in a year, as an expansion in the nation's manufacturing for a fourth month indicated the world's third-largest economy is recovering.

The Shanghai Composite Index rose 48.79, or 1.7 percent, to 3,008.15, its highest close since June 11 last year. The index gained 63 percent in the first half of 2009, the highest rise in 17 years and the world’s second-best performer. Shares on the gauge trade at 25.6 times earnings, the most expensive since March 2008.

The index still trades at less than half its peak of 6,092.06 in October 2007.

Market watchers say that after a short period of mild corrections, China's stock market will march toward higher ground.

Investors are encouraged by the government's huge stimulus plan to jumpstart the economy out of a sudden decline of outside demand since the global financial crisis erupted in September. A loose monetary policy left open the sluice for credit, with more than 6 trillion yuan (USD882 billion) in loans issued during the first six months.

The economy may keep improving in the third and fourth quarters, enabling the nation to meet its 8 percent economic growth target for this year, Zhou Xiaochuan, central bank governor, said this week.

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Editor: Chen Minjie