China's key stock index jumps 7.6 percent updated 3:51 a.m. ET Aug. 20, 2008 SHANGHAI, China - Chinese stocks have posted their biggest gain in nearly four months on speculation Beijing plans new economic stimulus measures and other policies aimed at reviving the country's languishing markets. The benchmark Shanghai Composite Index jumped 7.6 percent Wednesday to 2,523.28. It is the biggest one-day advance for the index since it rose 9.3 percent on April 24 after the government cut the tax on share transactions. The Shenzhen Composite Index shot up 7.2 percent to 712.82. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below. SHANGHAI, China (AP) — Chinese stocks surged early Wednesday on speculation Beijing plans new economic stimulus measures and other policies aimed at reviving the country's languishing markets. The benchmark Shanghai Composite Index had gained 6 percent to 2,482.64 by midday. The Shenzhen Composite Index also jumped 6 percent to 705. Share prices rose across the board, with major brokerage CITIC Securities hitting the upside 10 percent limit at 18.70 yuan and Poly Real Estate also gaining 10 percent, to 15.07 yuan. The rally came after investment bank JPMorgan issued a report saying China's leaders are considering a stimulus plan of up to 400 billion yuan (US$58.4 billion), including tax cuts and measures to stabilize the financial markets and boost the housing industry. Investors used the news as an excuse to hunt bargains after recent losses that had taken the markets to 20-month lows. "The market has been pacing up and down at low levels for a long time. Investors have all been waiting for a chance," said An Yun, a strategist at Shenyin Wanguo Securities in Shanghai. Among other measures planned, the report said, the government would raise prices for electricity and fuel shortly after the Olympics, which end Sunday in Beijing. Seemingly corroborating that claim, the government announced late Tuesday that it was raising electricity tariffs for the second time in two months, with wholesale power prices rising about 5 percent, on top of a 4.7 percent increase in July. The move is meant to help utilities offset high coal costs, which had squeezed electricity generators in recent months and spawned power outages and rationing. Coal stocks have run dangerously low at many power plants recently because utilities have balked at paying current high market prices. Power generators advanced, with Huaneng Power International up 3.8 percent to 7.72 yuan and Shenhua Energy adding 6.2 percent to 28.10. Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
