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Hong Kong - China’s stocks rose, extending a weekly gain, on speculation the new head of the nation’s securities regulator will take steps to boost the world’s second-largest equity market.
The Shanghai Composite Index advanced 2.2% to 2 921.83 at 1:02 p.m. local time, led by commodity producers and energy companies. The benchmark measure climbed 3.5% last week, the most in two months. Developers gained after the government said it will cut taxes on home transactions. The Hang Seng China Enterprises Index climbed to a three-week high.
Liu Shiyu takes over as chairman of the China Securities Regulatory Commission, assuming oversight of the world’s second- largest stock market in the wake of last summer’s slump that saw predecessor Xiao Gang criticized for mismanagement.
Liu was previously chairman of Agricultural Bank of China and was a deputy governor at the People’s Bank of China before that. The reshuffle comes before the nation’s Communist leaders are due to meet next week to set out a new five-year economic plan.
"Consensus in general is taking this replacement as a bullish development," said Hao Hong, Hong Kong-based equity strategist at Bocom International Holdings. "The market will be anticipating more supportive policies as the new chairman sets in."
World’s worst
Trading in Shanghai was 31% above the 30-day average for this time of day. Hong Kong’s Hang Seng Index rose 0.8% at noon, while the Hang Seng China Enterprises added 1.3%. The Shanghai gauge is still the world’s worst performer this year after Greek and Italian equities, plunging 18%.
All industry groups rose on the CSI 300 index, which advanced 2.1%. A gauge of material companies jumped 4.2% as Xiamen Tungsten and China Minmetals Rare Earth soared by the 10% daily limit. Shanxi Xishan Coal & Electricity Power led energy stocks higher, increasing 10%. In Hong Kong, Bank of East Asia jumped 9.4% to the highest level since January 7 after Chairman David Li bought 110 000 shares.
Poly Real Estate Group climbed 3.9%, propelling a gauge of developers in Shanghai. The government said on Feb. 19 after the market was closed that it will cut taxes on home transactions. China will set the deed tax at 1.5% of the home’s value for first residences bigger than 90 square meters and at 1% for those smaller than that size, the finance ministry said in a statement.
“Sentiment is buoyant with some positive developments,” said Clement Cheng, a Hong Kong-based trader at RBC Investment Management Asia. “The replacement of CSRC chief and tax cut on home transactions are lending some support to the market.”
