Infrastructure leads stock increases

Shanghai stocks jumped more than 2.5 percent led by infrastructure firms as government facilitates investment.

Shanghai stocks jumped more than 2.5 percent on Tuesday with growth led by infrastructure.

The Shanghai Composite Index gained 2.58 percent to close at 2,925.72 points.

On Monday, the central government allowed local governments to use proceeds from bonds as capital for major investment projects, including highways, gas and power supplies and railways, according to Xinhua News Agency.

That would help “increase effective investment, improve economic structure, stabilize aggregate demand and maintain sustained and healthy economic development,” Xinhua said.

Japanese investment bank Nomura said in a research note on Tuesday that the company believes that “Beijing will likely step up its stimulus measures to stabilize financial markets and growth.”

In addition, UBS Securities said in a report that it expects stable liquidity conditions at the end of first half of this year, and acceleration of local government bond issues.

UBS Securities recommended buying high-quality listed companies with high profit margins: food and beverages, home appliances, duty-free operators and airports. UBS also recommended defensive sectors such as utilities (except independent power producers), environmental protection and construction.

Xinjiang Qingsong Building Materials and Chemicals Group Co Ltd surged by the daily limit of 10 percent to 4.04 yuan (US$0.58), Huaxin Cement Co Ltd jumped 8.72 percent to 19.45 yuan.

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