Rollling in It: Beijing pledged no major credit tightening moves for the rest of the year
CHINESE A SHARES rose by 0.65% today, with the Shanghai Composite Index finishing at 2,588.68 on strength from agricultural and property counters, with trading turnover at 88.6 bln yuan on the day.

It was the sixth straight winning session for the benchmark Index, which closed at its highest mark since June 22.

Shares in Hong Kong closed up 0.12% today at 20,839.91.

The benchmark Hang Seng Index in Hong Kong, which is more heavily weighted toward financial counters than its mainland counterpart, was lifted by a recent strong showing by Wall Street as well as a positive ratio of healthy banks in Europe following a recent stress test.

Worries over the euro zone's debt situation have been largely calmed of late following the stress tests for leading lenders in the EU.

However, analysts added that they did not expect Hong Kong shares to show any significant bounceback in the near-medium term, with the market likely to trade between 20,000 and 21,000 this week.

Driving the sanguine spell for China’s A shares today was an announcement late last week from Beijing that it would strive to keep macroeconomic policy stable for the rest of the year -- good news for consumption stocks and investors worried about any advent of tighter credit campaigns keeping investment capital out of property investment in particular.

Moderate increases in the CPI in recent months have tempered concerns over any recurrence of runaway inflation, and even property prices have shown signs of slowing in key markets, which helped Beijing decide to announce the de facto freeze on any sudden interest rate hikes for the remainder of 2010.

Some commodities shares jumped on recent news that economic regulators would implement measures to support metallurgical firms, particularly the non-ferrous sector.
Chalco jumped 6.4% today on supportive policy for the non-ferrous sector

China’s biggest aluminum firm Chalco (SZA: 601600; HK: 2600) saw its Shanghai-listed A shares close up 6.4% at 10.2 yuan while domestic non-ferrous peer Yunnan Copper (SZA: 000878) ended 1.1% higher at 20.0 yuan.

As expected, China’s property developers were higher on allayed concerns of credit tightening to the critical sector.

Poly Real Estate, the country’s No.2 developer after China Vanke, rose 0.7% to 12.5 yuan while COFCO Property added 0.8% to 8.0 yuan.

Not all sectors saw valuation hikes on the assurances of stable macroeconomic policy issued over the weekend.

The upcoming IPO of Everbright Bank Ltd dampened lender prospects on liquidity fears, especially coming as it does on the heels of the massive dual listing in Shanghai and Hong Kong of Agricultural Bank of China (ABC). ABC lost 0.4% to close at 2.8 yuan while Bank of China shed 0.3% to 3.6 yuan.
Analysts see little chance of a major bull run in the current quarter

Most analysts cited in the PRC press say that the six-day winning streak could see another correction soon, as still skittish investors look to cash in their gains after enduring a very trying first half, when the benchmark Index shed nearly 30% -- the second worst performer worldwide after Greece.

Sinolink Securities said that even though the market has bounced back from the early-July low of 2,319 points, there is little major upside potential over the next two to three months and actual market conditions rather than macroeconomic policy directives out of Beijing will once again take center stage and temper enthusiasm for any sustained rally.

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