China Shares End Higher Led By Cement, Construction-Related Stocks - Wall Street Journal

SHANGHAI (Dow Jones)--China shares ended higher Monday, rising from a six-week low, as expectations that the government will boost infrastructure investments prompted buying in cement and construction-related stocks.

The benchmark Shanghai Composite Index, ended up 1.2% to 2361.37, closing near the highs of the session. Even as it dipped earlier in the morning, the index stayed above 2300, a key psychological level that analysts have been saying may be a bottom for the market.

The Shenzhen Composite Index rose 1.4% to 948.42.

"Over the weekend, the government rolled out new policies encouraging private investment in state enterprises, which is indicative that it is paying attention to a weakening economy," said Zhang Yanbin, an analyst with Zheshang Securities.

While many analysts say the market may be rangebound until investors get further clarity on Greece's future in the eurozone and the Chinese authorities' next move on monetary policy, they also say the recent raft of fiscal reforms from Beijing is giving investors some hope.

In recent weeks, different arms of the Chinese government ranging from the commerce ministry to the railways ministry have unveiled a series of stimulus measures to bolster the economy. Investors are also expecting the government to ramp up its own spending in infrastructure.

While stocks opened the session lower with macro concerns weighing heavily on sentiment, sectors like cement, social housing, building and railroads helped the market stage a turnaround before midday.

Anhui Conch Cement jumped 5.8% to CNY17.87. Fujian Cement surged 7.5% to CNY9.09 and Shaanzi QinLing Cement ended up 5% at CNY3.76.

"A price-to-earnings ratio of 12 times in the cement sector is low so the sector may still be undervalued," said Zheshang Securities analyst Wang Weijun.

Also powering the market higher, China Railway Erju soared by the 10% daily limit to CNY8.07. Tianjin Good Hand Railway Holding also reached the 10% daily limit, finishing up at CNY3.17.

Among other active counters, bank stocks rose modestly after China's banking regulator said non-state owned companies will be able to take a more than 20% stake in a regional bank or rural lender, a sign that the government continues to take steps to overhaul an inefficient financial system.

China Construction Bank was up 0.5% at CNY4.50, Industrial & Commercial Bank of China rose 0.5% to CNY4.20 and Bank of China gained 0.7% to CNY3.02.

-By Chao Deng, Dow Jones Newswires; 86-21-6120-1200; chao.deng@dowjones.com