Mainland stocks up as resource firms rally

Chinese mainland’s major share indexes rebounded on Wednesday as investors piled into blue chips after robust economic growth data and on expectations that the central government is stepping up efforts to reform lumbering and inefficient State companies.

Even badly bruised small caps shrugged off early weakness to end higher, though traders were not sure if their recent sharp correction has ended.

The blue- chip CSI300 index rose 1.71 percent to 3,729.75 points, while the Shanghai Composite Index gained 1.36 percent to 3,230.98.

Start- up board ChiNext ended up 1.04 percent. The index plunged 5.11 percent on Monday.

“Blue- chips are powering ahead but ChiNext is in the abyss. Such divergent trends will be self- reinforced, and will last for at least a year,” said Chang Chenwei, trader of a Shanghai- based hedge fund house.

State- owned firms in particular were advancing on expectations of further reforms, he noted.

Earnings of steel and coal firms, for example, have benefited from a government drive to shut older, more inefficient plants and mines. Authorities have also been orchestrating mergers in the bloated State sector to create companies which are more competitive.

Most sectors gained ground. Shares of raw materials producers far outperformed the broader market with a 3.6 percent gain, after some firms in the sector forecast robust mid- year earnings growth.