By Daniel Inman
Chinese stocks jumped Monday, with Shanghai rising the most since September, after China published a broad outline for economic reform.
Investors had their first opportunity to react to a reform plan that was released by Beijing late Friday, with the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.55% rising 2.9% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.33% up 2.7%. Chinese companies listed in Hong Kong were at the forefront of the day’s gains, as the Hang Seng China Enterprises Index soared 5.7%.
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Beijing’s announcement outlined a broad restructuring of the economy, saying that the government would open the financial sector and relax restrictions on investment. In addition, the government pledged to improve the country’s initial-public-offering system to adopt a more market-oriented approach where companies can list according on their merits.
A number of sectors benefited from the plan, though financial companies took the lead. Chinese brokerages surged in Hong Kong, with the plans to revamp the IPO system lifting hopes that companies will be able to list again after a one-year freeze. Citic Securities /zigman2/quotes/210326178/delayed CN:600030 +0.11% pushed 10% higher and Haitong Securities /zigman2/quotes/203443667/delayed CN:600837 +0.93% rose 8.8%.
Banks and insurers also moved higher on increased expectations for financial reforms, though insurance companies outpaced lenders, as analysts said they are better positioned to take advantage of China’s push toward financial deregulation. Industrial and Commercial Bank of China /zigman2/quotes/201401473/delayed HK:1398 +2.79% /zigman2/quotes/204265987/delayed IDCBF -6.88% , and Ping An Insurance (Group) Co. of China /zigman2/quotes/202773380/delayed CN:601318 +0.63% added 9.5%.
Companies that make products for babies shot higher after Beijing said that it would relax the one-child policy that has been in place for more than three decades. Infant formula producer Biostime International Holdings /zigman2/quotes/208474129/delayed HK:1112 -1.47% /zigman2/quotes/207123035/delayed BTSDF -19.53% rose 6.5%.
Friday’s reform-plan document was released just days after the Chinese Communist Party ended a large political meeting known as the “ Third Plenum,” which was initially followed by a vague communiqué that prompted substantial selling across the region in the middle of last week.
Across the rest of Asia, gains in stocks were more moderate.
Japan’s Nikkei Average /zigman2/quotes/210597971/delayed JP:NIK -1.83% ended flat, pausing after a 7.7% surge last week — the index’s best weekly gain so far this year.
China eases one-child policy
Chinese leaders agreed to loosen the country's one-child policy as they eye an ever-shrinking labor pool. (Photo: Getty)
After months of range-bound trading, Tokyo came back to life last week after the yen /zigman2/quotes/210561789/realtime/sampled USDJPY +0.2105% started to weaken, with the dollar climbing above the much-watched ¥100 mark. The yen was little moved while Japanese stocks were trading, but the dollar slipped below ¥100 late in Asia, last at ¥99.94 compared with ¥100.17 late Friday in New York.
Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -3.16% however, managed a 0.9% gain in Tokyo, after the firm sold more than one million units of its new PlayStation 4 console within 24 hours of its debut in the U.S. and Canada on Friday.
Elsewhere in Asia, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.71% rose 0.3%, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.23% dropped 0.3%, and Singapore’s Straits Times Index /zigman2/quotes/210597985/delayed SG:STI +0.49% rose 0.2% late in the day.