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China Daily Website

FTZ shares jump on statement from PBOC

Updated: 2013-12-05 10:32
By Gao Changxin in Shanghai ( China Daily)

Shares related to Shanghai's free trade zone surged on Wednesday after the central bank promised to launch financial liberalization measures in the new area within three months.

Shanghai Lujiazui Finance & Trade Zone Development Co Ltd, a property developer whose business is focused on the financial district of Lujiazui, rose by the daily 10 percent limit to 19.20 yuan ($3.15).

Shanghai International Port (Group) Co Ltd, a container terminal operator, also rose by the daily limit to 5.04 yuan. It's a joint venture of Shanghai Pudong Road & Bridge Construction Co Ltd and Orient International Enterprises Co Ltd.

The benchmark Shanghai Composite Index rose 1.3 percent, or 29 points, to 2,251.76 points.

The CSI 300 Index, which tracks bigger companies in both Shanghai and Shenzhen, was up 1.3 percent to 2,475.14 points.

"The market is clearly excited by the central bank's announcement," said Zhang Qi, chief economist at Taitong Securities Co Ltd.

CSI 300 futures suggest that the index could go even higher. The most actively traded December contract was up 1.09 percent on Wednesday to 2,482.2 points. The January contract gained 1.1 percent to 2,485.8 points, while the March 2014 contract rose 1.14 percent to 2,493.6 points.

The People's Bank of China, the central bank, said in a statement on Wednesday that it will begin rolling out financial liberalization reforms within three months in the China (Shanghai) Pilot Free Trade Zone.

The announcement came a day after the PBOC gave details on plans for trial policies in the FTZ.

"It's clearly good news that the central bank moved so quickly and made a commitment. But we need more details to know exactly how the zone will operate financially," said Lu Zhengwei, chief economist at Industrial Bank Co Ltd.

He said that policies involved with capital account liberalization are the most significant. The most encouraging of these, he added, is that individuals will be free to carry out cross-border transactions using funds earned in the zone.

Other policies include allowing qualified financial institutions in the zone to trade large-scale certificates of deposit.

Qualified companies and individuals in the zone will also be allowed to borrow yuan abroad, although those funds can't be used to invest in securities or derivatives or to make loans to other parties.

 
 
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