SHANGHAI stocks yesterday surged the most in a month, sending the key index to a nearly seven-month high, after China's securities regulator said the investment quota for foreigners to invest in the stock market could be raised by 10 times.
The Shanghai Composite Index soared 3.06 percent, the biggest rally since December 14, to 2,311.74 points, the highest close since June 18.
The current quotas of the Renminbi Qualified Foreign Institutional Investment (RQFII) and the Qualified Foreign Institutional Investment (QFII) that allow foreign investors to directly invest in yuan-denominated shares can be raised as much as 10 times, Guo Shuqing, chairman of China Securities Regulatory Commission, said at a conference in Hong Kong yesterday.
With the increase Guo expects a large amount of new capital to flow into China's stock market and benefit it in the long run, analysts said.
"About 2 trillion yuan (US$322.6 billion) would be added to the domestic stock markets if the investment quotas of QFII and RQFII were increased by tenfold," said Liu Ying, analyst at Huatai Securities.
In a report released yesterday UBS estimated China's stocks to soar 20 percent this year.
Shares also surged on optimism over China's economy which is set to grow 8 percent this year, the Development Research Center of the State Council said in a report last Friday. That would be higher than an expected growth of 7.7 percent in 2012.
Property firms rose after the State Administration of Taxation said the property tax trial would not be extended in the short term. Poly Real Estate rose 4.2 percent to 14.10 yuan, and Gemdale Corp climbed 4 percent to 7.08 yuan.
Beijing Capital Co, a wastewater disposal firm, added 3 percent to 4.41 yuan and Tianjin Capital Environmental Protection Group Co leapt 5.2 percent to 4.87 yuan.
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