China shares rise to near 4-week high on reform hopes

Mon Oct 14, 2013 12:57am EDT

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* CSI 300 +0.3 pct, Shanghai Comp +0.5 pct

* Investors shrug off surprise fall in Sept exports

SHANGHAI Oct 14 (Reuters) - China shares edged up to a near four-week high on Monday morning, supported by gains in the railway sector, as data showing an unexpected drop in September exports failed to dent investor confidence about the economy.

The country's fell 0.3 percent last month from a year earlier, data showed on Saturday, sharply confounding market expectations for a 6 percent rise, and the worst performance in three months.

However, market players remained optimistic that economic reforms, perhaps involving rural landholdings and taxes, could be announced around a key Communist Party meeting in early November.

"Rather than fundamentals, investors are betting on potential policy dividends," said Zhang Fan, an investment manager at Fosun Group, an investment firm.

The CSI300 of the leading Shanghai and Shenzhen A-share listings was up 0.3 percent at midday break, hitting its highest level since Sept. 17. The Shanghai Composite Index climbed 0.5 percent.

"The index will climb further, unless the U.S. government really defaults, which is not very likely," said Pan Shaochang, analyst at Dongguang Securities, referring to the stalemate of the U.S. debt ceiling talks that has kept some Chinese investors on the sidelines.

Railway stocks surged after Chinese Premier Li Keqiang promoted China's high-speed railway technology during his visit to Thailand.

Li called for closer bilateral railway cooperation while opening an exhibition about China's high-speed railways together with Thai Prime Minister Yingluck Shinawatra, the official Xinhua news agency reported.

Shares of Chinese locomotive maker China CNR Corp and rival CSR Corp both jumped by the 10 percent daily limit.

Most real estate stocks fell after the official China Securities Journal reported that Beijing may expand a pilot program on property taxes and set a floor for annual land supply, as part of efforts to curb housing prices.

China Vanke Co Ltd, China's biggest home builder, lost 2.33 percent, while China Merchants Property Development Co, another major developer, fell 2.44 percent.

China's annual inflation rate climbed to a seven-month high of 3.1 percent in September from 2.6 percent in August, official data showed on Monday.

The inflation rate was higher than market expectations, but analysts said any tightening in policy was unlikely.

"I don't see any tightening policies in the near future and the market is not short of liquidity," said Wu Bangdong, strategist at Changjiang Securities.

"Investors will continue to bet on those stocks that would potentially benefit from future government reforms, and stay away from the sectors most vulnerable from economic restructuring," he said.

Hong Kong markets were closed for a public holiday. (Reporting by Samuel Shen and Kazunori Takada; Editing by Richard Borsuk)

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