China's stocks rise as rail companies, liquor lead gains

Hong Kong - Chinese shares climbed toward a three-week high, led by an advance in rail companies and liquor makers.

The Shanghai Composite Index added 0.6% to 3 155.89 at 1:57 local time. China Railway Group and Guangshen Railway Company rallied more than 2% after Xinhua News Agency said China will invest about 800bn yuan ($115bn) in railways this year, the same amount as in 2016.

Kweichow Moutai Company climbed ahead of the Lunar New Year peak consumption period, touching a record high.

The Hang Seng China Enterprises Index fell 0.1% as energy producers lagged.

China has boosted spending on bridges, roads and railways as the government seeks to keep the world’s second-largest economy growing around 6.7%, helping a gauge of industrial stocks rally almost 10% in the fourth quarter.
 
Policy makers have vowed to speed up reforms in state-owned enterprises to improve profitability.

China Railway Corporation will start mixed-ownership reforms this year, Shanghai Securities News reported on Tuesday, citing General Manager Lu Dongfu.

"The China and Hong Kong markets will remain in range-bound trading before Chinese New Year," said Ben Kwong, executive director at KGI Asia in Hong Kong.

"On one hand, the liquidity situation will remain tight as an interest-rate or reserve-ratio cut seems unlikely thanks to a weakening yuan.

On the other hand, some stocks may benefit from specific fiscal boosts or reform initiatives, such as the railway sector."

The Hang Seng Index was little changed at 22 134.09, with PetroChina Company and China Petroleum & Chemical Corporation among leading decliners after crude slumped in New York on Tuesday.

China Shenhua Energy Company, the Hang Seng Index’s biggest gainer, rallied as much as 4.8% after UBS AG analysts led by Benson Chen raised the stock’s rating.

The consumer staples sector was the biggest gainer in the CSI 300 Index, adding 2.3% as the Westpac-MNI China Consumer Sentiment Indicator showed confidence in the economy improved in December from a month earlier.

Kweichow Moutai rose as much as 4.2%, while Wuliangye Yibin added 3.6% Lenovo, the third-biggest gainer in the Hang Seng Index, advanced 2.7% at one time to reach a two-month high Henry Group surged 28% after a Hong Kong stock exchange filing showed shareholders with more than a 70% stake may sell shares, which may trigger a general offer for the company.

The ChiNext Index, a measure of small-company shares in Shenzhen, jumped 1.4%, the most since October.