Stocks put on increase to three-week high
Chinese mainland shares climbed to a three-week high, led by an advance in rail companies and liquor makers.
The Shanghai Composite Index added 0.7 percent to 3,158.79 at the close. China Railway Group Ltd and Guangshen Railway Co rallied more than 2 percent after Xinhua News Agency said China would invest about 800 billion yuan ($115 billion) in railways this year, the same amount as in 2016.
Kweichow Moutai Co climbed to a record ahead of the Lunar New Year peak consumption period. The Hang Seng China Enterprises Index fell 0.2 percent as energy producers lagged.
China has boosted spending on bridges, roads and railways as the government seeks to keep the world’s second-biggest economy growing around 6.7 percent, helping a gauge of industrial stocks rally almost 10 percent in the fourth quarter.
Policy makers have vowed to speed up reforms in Stateowned enterprises to improve profitability. China Railway Corp will start mixed-ownership reforms this year, Shanghai Securities News reported on Tuesday, quoting General Manager Lu Dongfu.
The Chinese mainland and Hong Kong markets “will remain in range-bound trading before Chinese New Year”, said Ben Kwong, executive director at KGI Asia Ltd in Hong Kong.
“On one hand, the liquidity situation will remain tight as an interest-rate or reserveratio 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 22,134.47 with PetroChina Co and China Petroleum & Chemical Corp among leading decliners after crude slumped in New York on Tuesday. China Shenhua Energy Co, the Hang Seng Index’s biggest gainer, rallied 3.3 percent after UBS AG analysts led by Benson Chen raised the stock’s rating.
The ChiNext Index, a measure of small-company shares in Shenzhen, closed up 1.4 percent, the most since October. The gauge tumbled by 28 percent last year, compared with a 12 percent decline in the Shanghai benchmark index.
“Some mutual funds switched some of their holdings to blue chips from ChiNext shares at year-end as they compiled quarterly reports for their clients, and now the ‘window dressing’ pressure is gone,” said Zhang Gang, an analyst at Central China Securities Holdings in Shanghai.
“The gauge was a bit oversold earlier and some investors are bargain-hunting high-growth stocks before the earnings season.”
On one hand, the liquidity situation will remain tight as an interest-rate or reserve-ratio cut seems unlikely thanks to a weakening yuan.” Ben Kwong, executive director at KGI Asia Ltd in Hong Kong