BEIJING: China’s stocks posted their biggest two-day gain in almost a month, led by industrial and telecom companies, as speculation the government will accelerate mergers among state-owned enterprises overshadowed weak economic data.
The Shanghai Composite Index rallied 3.6 percent to 3,877.66 at 1:04 p.m. China Shipbuilding Industry Co. and China United Network Communications Ltd. both surged by the 10 percent daily limit. China is considering combining China Shipping Group and Cosco Group, its two major shipping companies, according to people familiar with the matter. Producer prices fell in July to the lowest level since 2009 and exports dropped more than expected, weekend data showed.
“State-owned enterprise mergers are an investment theme that’s quite certain and there are signs that the move will speed up,” said Li Jingyuan, general manager at Shanghai Zhaoyi Asset Management, who is adding to his stock holdings. “Foreign investors pay more attention to economic data and fundamentals, while local investors are more sensitive to policies.”
The Shanghai gauge has climbed 5.9 percent in the past two days, extending a rebound to 10 percent since the July low as authorities took unprecedented measures to shore up markets including banning stake disposals by major shareholders, suspending initial public offerings and compelling state-run institutions to support the market with equity purchases.
