Money

Stocks rise as social security fund buys 2b yuan of shares

(Agencies)
Updated: 2010-07-07 16:56

SHANGHAI - Chinese shares rose Wednesday on news reports the national social security fund is buying shares.

The benchmark Shanghai Composite Index edged up 11.69 points, or 0.5 percent, to close at 2,421.12. The Shenzhen Composite Index for China's smaller second exchange added 1.3 percent to 958.39.

A newspaper reported Wednesday that the National Social Security Fund, which manages government pension and social welfare reserves, has bought shares worth about 2 billion yuan ($295 million). There was no confirmation by the fund but analysts said investors took the report as a sign it was bargain-hunting after the Shanghai index plunged to a 15-month low last week amid concern the economy is slowing.

Related readings:  Chinese shares rise slightly Wednesday  Chinese shares advance the most in two weeks Tuesday  Steel makers drag Chinese shares down  Chinese shares surge almost 3%

"No matter if the news is true or false, it reflected a sentiment that the market needed the government to take actions and shore it up," said Lin Feng, an investment manager for SinoLink Securities in the western city of Chengdu.

Consumer goods makers rose on hopes the government might issue more policies to boost consumption. Television manufacturer Sichuan Changhong Electric Co soared by the daily 10 percent limit to 3.98 yuan, while home appliance producer Wuxi Little Swan Co jumped 3.1 percent to 8.03 yuan.

Shanghai-based companies got a boost from news reports that a Disney theme park will start construction there by November. Shanghai Jinjiang International Hotels Development Ltd surged by 5.7 percent to 19.22 yuan, while Shanghai Lujiazui Finance & Trade Zone rose 1.7 percent to 17.21 yuan.

Battery makers gained on hopes for stronger sales after the government announced a trial of a subsidy for electric cars. Shenzhen Desay Battery Tech Co jumped 10 percent to 21.34 yuan, while Eve Energy Co climbed by 6.3 percent to 27.4 yuan.

In currency markets, the yuan weakened to 6.7790 to the US dollar from Tuesday's close of 6.7745.