Quantitative easing fuels high in stocks

SHANGHAI - Mainland stocks rose, sending the benchmark index to a seven-month high, amid speculation capital inflows will increase on US quantitative easing and the central government will succeed in boosting domestic consumption.

Poly Real Estate Group Co climbed the most in two weeks after Caixin Media cited China Construction Bank Corp's chairman as saying that overseas inflows into property have been "formidable". PetroChina Co added 1.3 percent as oil traded close to a two-year high.

The Shanghai Composite Index gained 0.96 percent to 3159.51 at the 3 pm close on Monday, the highest close since April 15. The CSI 300 Index added 0.79 percent to 3548.57.

"The quantitative easing by the United States is driving speculative capital into China," said Zhou Xi, a Tianjin-based strategist at Bohai Securities Co.

"That has raised the stakes for regulators who must grapple with inflation and excess liquidity."

A measure of Shanghai-traded property stocks rose 1.5 percent to a seven-month high. Poly Real Estate jumped 2.2 percent, extending two straight weeks of gains. China Vanke Co climbed 1.6 percent on Monday.

There has been "formidable" foreign speculative capital inflows into China's property market, Caixin reported on its website on Nov 5, citing the text of a speech by Guo Shuqing, chairman of China Construction Bank.

Mainland home price growth will slow in October to 8.9 percent, according to the median of six economists in a Bloomberg News survey. Prices in 70 cities gained 9.1 percent in September, according to data from the statistics bureau, which is due to report last month's figures on Nov 10.

The Shanghai Composite has rebounded 34 percent since reaching this year's low on July 5 on expectations that central banks around the world will inject more cash into their economies to boost growth. It remains down 3.6 percent this year after the government raised bank reserve requirements and curbed lending growth to cool the economy.

Jiangxi Copper slid 2.3 percent and Yunnan Copper Industry Co dropped 1.5 percent on Monday.

The government is scheduled to release October statistics on trade, inflation, retail sales, industrial production and fixed-asset investments this week.

Inflation may exceed 3 percent this quarter, driven by rising agricultural product prices, the China Securities Journal reported, citing State Information Center Chief Economist Fan Jianping. The inflation rate may increase to 4 percent or higher next year, Xinhua News Agency said on Nov 6, citing Zhu Baoliang, chief economist for the State Information Center.

Hang Seng gains

Hong Kong stocks rose, extending the benchmark index's gain to its highest level in more than two years, after a report last week showed the US added more jobs than estimated, fueling optimism in a global economic recovery.

The Hang Seng Index gained 0.35 percent to close at 24964.37 on Monday.

The Hang Seng China Enterprises Index of H shares of mainland companies advanced 0.69 percent to 14204.13.

Bloomberg News