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| Chinese Shares Surge on Stimulus Hopes | Chinese Shares Surge on Stimulus Hopes |
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| HONG KONG — Stock markets in mainland China soared more than 4 percent during Friday trading, outshining the generally positive performance of shares across the region amid hopes that the Chinese authorities are revving up efforts bolster the country’s flagging pace of growth. | |
| The Shanghai composite index saw its biggest single-day jump in months, rising at one point by 4.5 percent to its highest level since mid-August before giving up some of the gains to close 3.7 percent higher. The market in Shenzhen ended the day with a gain of 3.8 percent. | |
| Both indices remain well below where they began the year, with evidence of China’s broad economic slowdown producing a marked slump in share prices since May. | Both indices remain well below where they began the year, with evidence of China’s broad economic slowdown producing a marked slump in share prices since May. |
| But for now, at least, investors took heart from news that the authorities had approved a series of subway and road construction projects over the past week. | But for now, at least, investors took heart from news that the authorities had approved a series of subway and road construction projects over the past week. |
| China-watchers pointed out that it was unclear whether the approvals in fact represented new cash being pumped into the flagging construction sector, or whether they were part of plans that had been previously announced. | China-watchers pointed out that it was unclear whether the approvals in fact represented new cash being pumped into the flagging construction sector, or whether they were part of plans that had been previously announced. |
| In either case, the markets on Friday cheered the news as evidence that Beijing is stepping up efforts to bolster growth. | In either case, the markets on Friday cheered the news as evidence that Beijing is stepping up efforts to bolster growth. |
| “The China market is very sentiment-driven, very driven by what the government is doing,” said Dariusz Kowalcyzk, an economist at Crédit Agricole in Hong Kong. | “The China market is very sentiment-driven, very driven by what the government is doing,” said Dariusz Kowalcyzk, an economist at Crédit Agricole in Hong Kong. |
| Better than expected weekly jobs figures from the United States on Thursday and confirmation, also on Thursday, that the European Central Bank will buy vast amounts of government bonds in a bid to relieve investor pressure on troubled Eurozone economies, also lifted sentiment. | |
| Stock markets across Asia reacted positively to those developments on Friday: Hong Kong’s Hang Seng Index closed 3.1 percent higher, while the benchmark index in South Korea added 2.6 percent, Taiwan’s Taiex gained 1.3 percent and the Straits Times index in Singapore rose 1 percent. | |
| The sharp rally in mainland China, however, was mainly driven by the domestic news, which generally tends to play a much bigger part in shaping movements in the country’s still largely closed equity markets, Mr. Kowalczyk said. | The sharp rally in mainland China, however, was mainly driven by the domestic news, which generally tends to play a much bigger part in shaping movements in the country’s still largely closed equity markets, Mr. Kowalczyk said. |
| Beijing has been drip-feeding stimulus measures into the economy over the past few months in an effort to counteract the impact of slowing exports to Europe and to buoy demand at home. | Beijing has been drip-feeding stimulus measures into the economy over the past few months in an effort to counteract the impact of slowing exports to Europe and to buoy demand at home. |
| Unlike during the aftermath of the financial crisis of 2008, China’s policymakers have recently taken a much more muted approach to spurring growth, apparently leery of producing another credit-driven investment binge of the kind that pushed up inflation and property prices during 2009 and 2010. | |
| This slow-motion approach to stimulus has worried many analysts and investors, who over the past two months have been eagerly awaiting more interest rate cuts and steps to facilitate additional bank lending. | This slow-motion approach to stimulus has worried many analysts and investors, who over the past two months have been eagerly awaiting more interest rate cuts and steps to facilitate additional bank lending. |
| A batch of economic data due out Sunday is expected to show that the economy continued to loose speed in August. The data, Mr. Kowalczyk said, “will make few people happy.” | A batch of economic data due out Sunday is expected to show that the economy continued to loose speed in August. The data, Mr. Kowalczyk said, “will make few people happy.” |
| Yao Wei, an economist at Societe Generale based in Hong Kong, wrote in a research note on Thursday: “Chinese economic data since the beginning of Q3 have been a series of disappointments,” referring to the July to September quarter. | Yao Wei, an economist at Societe Generale based in Hong Kong, wrote in a research note on Thursday: “Chinese economic data since the beginning of Q3 have been a series of disappointments,” referring to the July to September quarter. |
| “The authorities seem to be running a risky policy experiment to see how well the economy can hold up without any big dose of stimuli,” Ms. Yao added. “As the labor market deteriorates and credit risk rises, we think the central government should and will do more, albeit probably still incrementally.” | “The authorities seem to be running a risky policy experiment to see how well the economy can hold up without any big dose of stimuli,” Ms. Yao added. “As the labor market deteriorates and credit risk rises, we think the central government should and will do more, albeit probably still incrementally.” |