China Stocks Jump 5% on Strong Lending Data

Chinese shares jumped 5 percent Thursday following reports that lending by big state-owned banks remained robust in August, though they later fell back slightly.

The Shanghai Composite Index gained 130.05 points, or 4.8 percent to close at 2,845.02.

Real estate, financials and other market heavyweights were among the biggest gainers. Property developer China Vanke climbed 9.9 percent to 11.07 yuan and Poly Real Estate surged 8.6 percent to 23.91 yuan.

Sinopec, China’s biggest refiner, advanced 5 percent to 11.88 yuan after the government announced fuel price increases earlier in the week. PetroChina, the country’s biggest oil and gas producer and also the Shanghai benchmark’s most heavily weighted share, gained 3.2 percent to 13.39 yuan.

A report by the state-run newspaper China Securities Journal that new lending by China’s four biggest state-run banks totaled 160 billion yuan ($23.4 billion) in August, higher than market expectations, helped boost sentiment, analysts said.

Total new lending has dropped after a record surge earlier in the year, and fears that tighter credit might stifle liquidity have weighed on the market. The Shanghai benchmark saw its biggest drop in over a year, of nearly 7 percent, on Monday.

But investors took as a positive sign the report that the “Big Four” banks’ August lending was only slightly lower than in July, when they issued new loans worth 165 billion yuan.

Reports that share regulators intend to ensure stable and healthy development of the markets further boosted sentiment. Comments by Premier Wen Jiabao assuring that China’s monetary policy would remain unchanged also helped.

“These imply there is no big change on the way, and the expansionary fiscal policy will continue. Those encouraging signals are drawing huge flows of fresh cash back into the market,” said Peng Yunliang, analyst at Shanghai Securities, in Shanghai.

In currency dealings, the yuan strengthened to 6.8305, up from Wednesday’s close of 6.8308.

9/3/2009 5:05 AM ELAINE KURTENBACH, AP Business Writer SHANGHAI