Jobs growth boosts shares

Shanghai shares closed higher yesterday as market sentiment was boosted by strong jobs growth and despite a sharp decline in pharmaceutical stocks amid a vaccine scandal.

The Shanghai Composite Index jumped 1.07 percent to close at 2,859.54 points.

The Human Resources and Social Security Ministry said yesterday that urban employment grew to 7.52 million people in the first half of the year, an increase of 170,000 jobs over the same period a year earlier.

 The urban unemployment rate hit the lowest in several years at the end of June — 3.83 percent compared with 3.95 percent in June last year.

“In the first half, China’s employment conditions made good progress," said Ministry of Human Resources and Social Security spokesman Lu Aihong.

"China’s economy continued to maintain stable and high-quality development in the first six months, which also contributed to the employment improvement.

"The steady economic development is driven by a better economic structure, an improvement in the business environment, entrepreneurship and innovation.”

China’s GDP grew  6.8 percent year on year in the first half , the 12th straight quarter GDP growth  has stayed within the range of 6.7 to 6.9 percent.

Banking shares were buoyed after China released draft rules and guidelines to strengthen regulations for financial institutions’ wealth management and asset management businesses.

On Friday, the China Banking and Insurance Regulatory Commission released draft rules on commercial banks' wealth management products, saying that these products should be managed based on their net value.

The new rules will also lower the minimum amount of client subscription to any single public wealth management product from 50,000 yuan (US$7,360) to 10,000 yuan.

“The draft rules and guidelines will promote the healthy development of banks’ wealth management businesses and fend off systemic financial risks,” the commission said.

Shanghai-based research and consulting firm CIB Research said in a note that the changes, including the lower threshold, will attract more investors.

Li Chao, chief analyst at Huatai Securities also said it sends a positive signal to banks.

Iron and steel producers, infrastructure companies and banks were among yesterday's's biggest gainers.

Bank Of Chengdu Co Ltd surged by the daily limit of 10 percent to 9.75 yuan and the Bank of Shanghai Co Ltd added 3.88 percent to 10.97 yuan.

But health care shares fell due to a vaccine scandal involving China’s second-biggest rabies vaccine producer, Changchun Changsheng Life Sciences.

Authorities said Changchun Changsheng Life Sciences had violated standards and procedures for making the vaccine. On Sunday, Premier Li Keqiang called for an investigation and urged severe punishment for companies involved.

Shenzhen-listed Changsheng Bio-technology Co Ltd, the parent company of Changsheng Life Sciences, dropped 10 percent to 13.05 yuan yesterday. 

Other vaccine makers and pharmaceutical companies also fell sharply. Zhende Medical Co Ltd lost 9.56 percent to 44.66 yuan and Shanghai Fosun Pharmaceutical Group Co Ltd fell 4.61 percent to 37.90 yuan.