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1st LD-Writethru: China stocks close higher despite weak data

Xinhua, September 28, 2015 Adjust font size:

Chinese shares closed higher on Monday despite weak industrial data.

The benchmark Shanghai Composite Index closed up 0.27 percent to end at 3,100.76 points. The Shenzhen Component Index gained 2.13 percent to close at 10,115.55 points.

Total turnover on the two bourses came in at 404.4 billion yuan (63.5 billion U.S. dollars), down from the 561.8 billion yuan the previous trading day.

Shares related to Internet security, media, and softwares were among the biggest winners while banks and insurance companies lost the most.

Monday's gain came despite a 8.8 percent year on year fall on profits of China's major industrial firms in August, which widened from a 2.9 percent decline in July, according to data released by the National Bureau of Statistics (NBS) on Monday.

He Ping, an official with the Department of Industry at the NBS, cited weak domestic demand, rise in unit costs, the stock market rout, and volatility in the yuan exchange rate as the reasons driving down industrial goods prices, which contributed to the drop in profits.

During the first eight months, profits of the industrial companies with annual revenues of more than 20 million yuan (about 3.1 million U.S. dollars) dropped 1.9 percent year on year to around 3.77 trillion yuan. The decline widened from the one-percent decrease registered in the Jan.-July period.

While the weak economic data continued to put pressure on the stock market, analysts believe market sentiment will recover as regulators finish deleveraging of the A-share market.

Almost 70 percent of margin lending accounts have been cleared as of September 23, said China Securities Regulatory Commission spokesperson Zhang Xiaojun last Friday. The margin lending businesses have been widely blamed for pushing up the leverage level of the A-share market.

As the rest of the accounts are cleared up, the market will likely to rebound in October, said Industrial Securities in a report.

The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, climbed 5.01 percent to close at 2,122.26 points on Monday. Endi