Stocks hold steady on strong industrial profits

Chinese mainland stocks held steady on Wednesday, bolstered by strong gains in resources shares after upbeat industrial profit data and a robust earnings forecast by a major steelmaker helped to ease worries about slowing economic growth.

Investor confidence was also underpinned by signs of further restructuring in the bloated State sector and a conviction that the Chinese government will safeguard market stability ahead of a key meeting next month.

The blue-chip CSI300 index ended little changed at 3,821.20 points, while the Shanghai Composite Index was also flat at 3,345.27 points.

Profits at China’s industrial companies rose 24 percent in August from a year earlier, accelerating from the previous month.

Though much of the gain was chalked up to higher commodity prices, analysts said it also suggested that demand remains healthy despite an expected loss of economic momentum following a robust first half.

Reflecting that trend, Anyang Iron and Steel Inc forecast a sevenfold jump in net profit for the first nine months, boosting its Shanghai-listed shares by the daily maximum of 10 percent.

Investors also harbored hope that listed firms will benefit from stepped-up reform of Stateowned enterprises in China.

The Shanghai Securities News reported on Tuesday that Ping An Insurance Group Co of China is in discussion with China Eastern Group regarding the latter’s plans for mixed-ownership reform.

Resources firms, the biggest beneficiary from industry consolidation and State reform, rose sharply, with the CSI300 materials sub-index up 0.80 percent.

Banking shares dragged, with Jiangsu Changshu Rural Commercial Bank slumping 5.03 percent, pressured by more equity supply as some investors come out of lockup periods, allowing them to sell their shares.