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Stocks rise for fifth day in row

Stocks rise for fifth day in row

Write: Mattea [2011-06-29]

SHANGHAI - Stocks on the Chinese mainland rose for a fifth day on Monday, the longest winning streak since February.

The advance came after a cash shortage in the financial system eased and the nation's biggest brokerages said equities were poised to rally.

Stocks rise for fifth day in row

China Eastern Airlines Corp climbed to its highest point in two weeks after the government said it will cut import tariffs on jet fuel.

Tangshan Jidong Cement Co led gains for cement producers as CITIC Securities Co and China International Capital Corp recommended the industry on the outlook for economic growth.

Yanzhou Coal Mining Co rose 2.2 percent after a former central bank governor said inflation will slow.

"The domestic economy is in a good shape and a hard landing is unlikely," said Wei Wei, an analyst at West China Securities Co in Shanghai. "Stocks are pretty cheap."

The Shanghai Composite Index, which tracks the bigger of the country's stock exchanges, gained 12.02 points, to 2758.23 at the market's close.

It climbed 3.9 percent last week, the most since the five days ended Nov 5, after Premier Wen Jiabao said efforts to stem inflation have worked.

The Shanghai gauge has slumped 9.8 percent from this year's high on April 18 on concerns that government measures to cool inflation will slow economic growth.

The central bank has raised reserve requirements 12 times and interest rates four times since the start of last year.

The stock index has lost 1.8 percent this year, dragging down average estimated price earnings to 12.8 times from 15.9 times at the end of 2010.

The lowest Chinese stock valuations since economic growth collapsed three years ago are a sign to the nation's biggest brokerages that it's time to buy.

"Depressed valuations, sentiment and technical indicators all augur well for a budding tradable rally."

CICC said "highly cyclical" industries such as cement, mining, machinery, property, insurance, brokers, industrials and consumer discretionaries are likely to rally the most.

Premier Wen said China can keep full-year inflation within 5 percent as tightening measures take effect.

The inflation rate was 5.5 percent last month, the highest level since July 2008.

"I see difficulties in reaching the full-year inflation target of 4 percent," Wen said in comments broadcast on Monday by Hong Kong-based Cable TV.

"But it still can be kept below 5 percent after the efforts we have made." He spoke at a Chinese community event in London, the broadcaster said.

Bloomberg News