Optimism helps stocks trim weekly loss

SHANGHAI - Stocks on the Chinese mainland rose on Friday, trimming a weekly loss. The advance came after foreign direct investment climbed and the European Central Bank and international policy makers coordinated to lend dollars to banks to tame the credit crisis.

China Minsheng Banking Corp rose 0.87 percent after Shanghai Securities News reported that the regulator may allow lenders to conduct asset securitization to ease liquidity.

Southwest Securities Co advanced 1.44 percent after saying it will buy a stake in a fund management company. Poly Real Estate Group Co fell for the first time in five days on a newspaper report that Shanghai's new-home inventories had reached a record.

"The risk of a short-term default in the euro region looks low after cash injections from global central banks," said Dai Ming, fund manager at Shanghai Kingsun Investment Management & Consulting Co.

"The magnitude of the rebound may be limited, as you see no signs of policy loosening in China."

The Shanghai Composite Index, to 2482.34 at the 3 pm close. It retreated 0.6 percent this week, capping a third weekly loss. The CSI 300 Index climbed 0.18 percent to 2733.99.

Foreign direct investment in China climbed 11.1 percent from a year earlier to $8.45 billion in August, the Ministry of Commerce said in a statement on its website on Thursday.

Investment from overseas totaled $8.45 billion last month, after expanding 19.8 percent in July, the Ministry of Commerce said in a statement on its website on Thursday. For the first eight months, investment rose 17.7 percent to $77.63 billion.

"China remains the only bright spot amid the global financial turmoil," said Li Huiyong, a Shanghai-based economist with Shenyin & Wanguo Securities Co on Thursday. "Investment returns in China remain high and local authorities are keen to attract funds for new businesses," he said.

The European Central Bank said it had coordinated with the US Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to extend three-month loans to eurozone banks in an effort to ensure they have enough cash for the rest of the year.

The announcement added to optimism that policy makers were containing the European sovereign-debt crisis after the leaders of France and Germany confirmed they will support Greece's continued participation in the shared euro currency.

Banks gain

China Minsheng Banking Corp gained 0.87 percent to 5.82 yuan (91 cents). Shenzhen Development Bank Co climbed 2.66 percent to 17 yuan. China Everbright Bank Co added 0.99 percent to 3.07 yuan.

The asset securitization may help banks reduce liquidity pressure, Shanghai Securities News said, citing Yan Qingmin, assistant chairman of the China Banking Regulatory Commission.

Chinese stocks in Shanghai and Hong Kong may rally 15 percent over the next 12 months as equity prices track profit growth, said Patrick Ho, the head of Greater China equities at BNP Paribas Investment Partners.

BNP is also bullish on companies that will profit from increased consumption in China, including mobile telephone providers.

Bloomberg News

(China Daily 09/17/2011 page10)