| Tax rate news boosts Shanghai index to record |
SHANGHAI, Dec. 25 -- Mainland shares rose, pushing Shanghai's stock index to a record, on optimism China will unify the corporate tax rate by reducing that for domestic companies. China Vanke Co paced the gain by the biggest companies by market value, Bloomberg reported today.
"It will boost the return on domestic public companies and serve as a driver for long-term earnings growth by leveling the playing field,'' said Tony Zheng, who manages the equivalent of US$1.95 billion at Fortis Haitong Investment Management Co in Shanghai, according to Bloomberg.
Industrial & Commercial Bank of China Ltd led banking stocks higher after DBS Vickers Hong Kong Ltd raised its rating on the stock.
The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on mainland's two exchanges, gained 45.54, or 2.4 percent, to 1,941.19 at 2:04pm local time, set for the highest since the index was launched in April, 2005.
The Shanghai Composite Index, which tracks the bigger of mainland's two stock exchanges, jumped 4.1 percent to 2,438.49, after reaching an all-time high of 2,452.43. The Shenzhen Composite Index, which covers the smaller one, climbed 1.5 percent, to 543.58.
China Vanke, the nation's biggest property developer, jumped 0.90 yuan (11.5 US cents), or 6.2 percent, to 15.43 yuan. Citic Securities Co, the mainland's biggest publicly traded brokerage, rose 1.35 yuan, or 5.7 percent, to 25.31 yuan. China Petroleum & Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, advanced 0.30 yuan, or 3.7 percent, to 8.35 yuan.
China's top lawmaking body began discussing a draft law to unify income tax rates for foreign and domestic companies at 25 percent, the state-run Xinhua news agency reported yesterday.
The standing committee of the National People's Congress is reviewing the proposed law during a session that runs to December 29, Xinhua said, citing comments to the meeting by Finance Minister Jin Renqing. Foreign companies pay an average income tax rate of about 15 percent, while Chinese companies pay a nominal 33 percent, Xinhua said.
ICBC, the nation's largest bank, jumped 0.47 yuan, or the 10 percent daily limit, to 5.21 yuan. The stock was raised to "buy" from "hold" by Hong Kong-based analyst Jasmine Lai Kit Ying at DBS Vickers.
Bank of China Ltd, China's second-largest lender, rose 0.36 yuan, or 9 percent, to 4.36 yuan. China Merchants Bank Co, the nation's most profitable bank, added 0.66 yuan, or 4.3 percent, to 15.68 yuan.
"ICBC's upgrade renewed people's confidence in Chinese banks, and spurred a lot of fund managers to increase holdings on the banking sector again,'' said Wu Kan, an analyst at Shanghai Securities Consulting Co in Shanghai.
Steelmakers such as Baoshan Iron & Steel Co gained after Baosteel Group Corp agreed to a 9.5 percent increase in the price of iron ore for 2007 with BHP Billiton Ltd.
"The increase is smaller than in previous years,'' said Zhang Ling, who manages the equivalent of US$1.09 billion with ICBC Credit Suisse Asset Management Co in Beijing. "Investors are relieved that a deal has been reached" in a relatively short period.
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