China’s Stocks Gain for Fifth Week on Stimulus Plan Optimism

A rare bit of bright economic news out of China, via Bloomberg:

China’s stocks advanced, driving the benchmark index higher for a fifth week, on optimism government spending plans will revive growth and bolster corporate earnings. Trading surged to the highest in at least three years.

Sichuan Changhong Electric Co. and GD Midea Electrical Appliances Co. surged 10 percent after 21st Century Business Herald said the government plans to invest $88 billion in the electronics industry. China Railway Group Ltd. gained 7.7 percent after winning construction contracts. Aluminum Corp. of China Ltd. jumped 8.8 percent after its parent bought into Rio Tinto Group.

The rally is being “fueled by expectations of additional incentives for various sectors,” said Gabriel Gondard, Shanghai- based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7 billion in assets. “It will not be sustainable in the long run if we don’t get actual data showing the stimulus plan is effective.”

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