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UPDATED: November 11, 2008  
Chinese Shares Jump 7.27% on Economy Stimulus Package
The country's government pledged an active fiscal policy and moderately easy monetary policies to revive fast but steady economic growth by expanding domestic demand

Chinese shares jumped 7.27 percent on Monday, spurred by the country's 4 trillion yuan (585.98 billion U.S. dollars) plan to boost the economy, which was unveiled over the weekend.

The country's government pledged on Sunday an active fiscal policy and moderately easy monetary policies to revive fast but steady economic growth by expanding domestic demand.

The stimulus package was targeted projects in 10 major areas, such as low-income housing, rural infrastructure, water, electricity, transport, the environment, technological innovation and rebuilding from disasters, most notably the May 12 earthquake.

The policies include a comprehensive reform in value-added taxes, which would cut industry costs by 120 billion yuan.

The benchmark Shanghai Composite Index closed up 7.27 percent, or 127.09 points, to finish at 1,874.80. The Shenzhen index advanced 6.5 percent, or 374.03 points, to close at 6,127.12 points.

Analysts said the plan demonstrated the government's resolution to prop up the country's economic growth. The rise in U.S. stock market on Friday helped recover investor confidence.

CITIC Securities chief analyst Cheng Qingwei said both tax reform and macro-control policies were faster and bigger than expected.

Yang Yushan, manager assistant at Harfor Funds, echoed Cheng, saying the 10 stimulus measures would change the dim predictions.

The combined turnover nearly doubled from Friday's 40.2 billion yuan to finish at 78.636 billion yuan (11.52 billion U.S. dollars).

All sectors were rallied by the stimulus measures. Almost 150 shares in the two bourses rose to their daily limit. Stocks of building materials, steel, machinery and coal benefited most.

Baosteel, the country's largest steel producer, rose by the daily limit of 10 percent to close at 5.04 yuan, while Wugang finished at 5.01 yuan and Magang at 3.81 yuan.

The cement sector continued to rise with seven stocks up by the daily limit of 10 percent, including Hebei Taihang Cement, which closed at 3.47 yuan, and Anhui Conch Cement, the country's largest cement maker, which closed at 20.74 yuan.

The machinery equities performed well. Sany Heavy Industry Co. and Taiyuan Heavy Industry Co. both gained by the daily limit of 10 percent to end at 13.13 yuan and 13.30 yuan respectively.

Financial stocks posted widespread gains after the government's decision to take the moderately easy monetary policies on Sunday. China Merchants Bank, the sixth largest domestic lender, closed at 13.71 yuan, up 9.5 percent. Shanghai Pudong Development Bank rose by the daily limit of 10 percent to finish at 14.04 yuan.

Brokers and energy shares also ended up. Guojin Securities rose by 10 percent to 24.07 yuan as did Shenhua Group, the country's largest coal producer, which ended at 19.35 yuan.

(Xinhua News Agency November 10, 2008)

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