Policy pledge triggers rebound in stocks

Markets on the Chinese mainland rallied on Wednesday with investors picking up financial and machinery stocks after the new leadership pledged to keep macroeconomic policies stable and support economic growth in the next year.

The Shanghai Composite Index rose 2.8 percent, or 56.76 points, to 2031.91, returning above the 2000-point level for the first time since Nov 27. The Shenzhen Component Index rose 3.72 percent, or 289.93 points, to 8091.68.

The value of transactions on the Shanghai and Shenzhen bourses reached 85.4 billion yuan ($13.71 billion) and 65.1 billion yuan respectively.

Financial stocks and construction materials and machinery industry stocks led the rally.

Fujian Cement Inc, the country's leading cement producer, rose 10.07 percent to 5.9 yuan. Zhejiang Jianfeng Group Co Ltd, also a building materials producer, rose 10.04 percent to 8.99 yuan.

Distillers and liquor shares saw the smallest gains on Wednesday, suffering after excessive levels of plasticizer were found in Jiugui Liquor products. The giant Kweichow Moutai Co Ltd dropped by 0.16 percent to 196.64 yuan.

Trading number was up markedly, with the half-day number exceeding that for all of Tuesday. Zhang Jieyu, a financial adviser with China Merchants Securities Co Ltd, said a number of investors will see gains of more than 20 percent.

"Positive signals are coming out one by one. The authorities are slowing down IPO approvals, and further easing of monetary policy is expected. I think the market will rebound further. Today is just the start of an explosion."

Boosted by the strong rally in Shanghai, the Hong Kong market rose 2.16 percent on Wednesday.

The Hang Seng Index rose 470.94 points to end at 22270.91 - the highest since August 2011. Transaction value rose to HK$94.73 billion ($12.22 billion), thanks to the Ping An share placement. HSBC Holdings Plc announced plans to sell its 15.57 percent stake in China's Ping An Insurance (Group) Co on Wednesday to a Thai conglomerate, as the lender said it would pull out of a decade-long investment to raise capital and boost returns.

Many market participants see the Political Bureau of the Communist Party of China Central Committee meeting held on Tuesday as a confidence-booster regarding the economic situation over the next year.

HSBC's Chinese economics team said comments from the meeting implied that supportive economic policies would remain in place in China in coming quarters.

"China will fulfill its economic and social development tasks this year as its economy is stabilizing and positive elements are increasing," said a statement issued after the Political Bureau meeting, presided over by Xi Jinping, general secretary of the CPC Central Committee.

The statement said China will "maintain continuity and stability in its macroeconomic policies, make them more targeted and effective, and predetermine or fine-tune these policies at an appropriate time and in an appropriate way".