China’s stock market shrugged off fears in Hong Kong about some spectacular falls in the shares of former some former highflying companies and jumped more than 8%.
The highly speculative Shenzhen market had its best weekly performance since 2008, while the ‘more’ sedate Shanghai rose for a fourth day on Friday to hit a new seven-year high.
The gains were a direct response to more moves from the Chinese government to increase spending and debt to stop hundreds of billions of dollars of dodgy projects collapsing, and to boost prices to prevent the onset of deflation across more and more of the economy.
On Tuesday transport and urban building projects worth $US73 billion were brought forward to try and get the sluggish economy moving faster.
The Shanghai market jumped 2.8% Friday, taking its gains to 8.9% last week (up 44% for the year so far), while the Shenzhen New Index rose 1.1% to bring its rally to a massive 12.2% surge over the week (it was almost doubled in value this year).
The rally missed to Hong Kong which was up just 0.6% in the week as attention among investors (and embarrassed regulators) and offshore groups was on the spectacular collapse in the shares of a trio of companies which had strong run ups.
Shares of Chinese solar marker Hanergy Thin Film Power Group plunged nearly 50% on Wednesday before trading was, and remains, halted.
On Thursday the selling spread to Goldin Financial Holdings Ltd. a broker that provides short-term corporate financing to firms, and property developer Goldin Properties Holdings Ltd. Both are listed in Hong Kong and have the same major shareholder.
Both lost billions in value on Thursday, while on Friday the losses abated. Goldin Properties ended up 5% on Friday, but Goldin Financial closed down 3.2% on the day.
Together the two companies lost $US20.3 billion over Thursday and Friday.
