Q4 trade hopes spark mild rise in stock prices

Benchmark indexes close higher, led by logistics and equipment firms as signs of recovery, stability brighten

Equities rose slightly on Tuesday after reports of better foreign trade prospects in the fourth quarter helped the benchmark index post its fifth consecutive increase.

Shares of nearly 100 companies listed on the Shanghai and Shenzhen bourses surged by 10 percent (see table below), the maximum permissible daily limit, with logistics and equipment companies leading the rally. Declines in large-cap stocks from banking and energy sectors, however, crimped the surge in the benchmark index.

The Shanghai Composite Index gained 0.17 percent, to close at 3,293.23 points, while the Shenzhen Component Index climbed 0.74 percent, to end at 11,042.13 points.

The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises listed in Shenzhen, rose 1.09 percent to 2,342.04 points.

Analysts said that the A-share market is showing signs of recovery and stabilization after measures to stimulate the market were introduced. The recovery is expected to last through the next two months.

Stocks from infrastructure, construction and equipment manufacturing sectors are set to gain further on news that domestic infrastructure projects worth a combined value of 887.3 billion yuan ($139.9 billion) had been approved by authorities till September, including new railway construction plans and subway plans in Guangzhou, Guangdong province and Wenzhou, Zhejiang province.

Previously some institutions interpreted that the central bank would use the pilot program of using qualified credit assets as collateral and hiking the required loan-to-deposit ratio as "quantitative easing" measures. However, investors have now realized that such fears are unwarranted, said analysts.

The so-called 7-trillion-yuan stimulus measures and the China-style QE moves are not true and are illogical, they said. However, such measures will benefit the stock and debt markets as they can support healthy development of the sectors and optimize resource allocations in the long run, said a recent research report from Minsheng Securities Co Ltd.

"Short-term fluctuations may appear in the next few days after Monday's rally and profit-taking. In the fourth quarter, investors can gain more information after individual companies' Q3 reports come out and make investment decisions based on performance. And a series of national plans for reforms and upgrading will provide guidance to sectoral development in the next couple of years," said a research report from Haitong Securities Co Ltd.

With imports of commodities, especially oil and gas, slowing in September, most of the Asian bourses tumbled slightly on Tuesday. Japan's Nikkei 225 index fell 1.11 percent to 18,234.74 points, while South Korea's KOSPI Composite Index fell 2.58 percent to 2,019.05 points.