April 6, 2017 / 7:10 AM / 3 months ago

China stocks end at 4-month high, aided by new economic zone plan

3 Min Read

SHANGHAI, April 6 (Reuters) - China stocks extended gains on Thursday to hit 4-month highs as investors continued to chase stocks which could benefit from the government's launch of a massive new economic zone near Beijing.

The blue-chip CSI300 index rose 0.3 percent to 3,514.05 points, while the Shanghai Composite Index added 0.4 percent to 3,281.00.

Most of the market's attention was focused on the new Xiongan special zone, described as "a thousand-year project", with dozens of stocks related to the plan surging the maximum allowed 10 percent trade limit for the second session in a row.

Many domestic brokerage firms expect the initiative to become a strong investment theme in coming months, given the prominence of the plan.

In particular, infrastructure stocks are widely seen benefiting from the development of the special zone, which would be modelled on the Shenzhen Special Economic Zone that helped kickstart China's economic reforms in 1980.

An index tracking major infrastructure players advanced 2.3 percent to a 15-month high, after registering best day in four months the previous session.

Infrastructure giants China State Construction Engineering leaped 6 percent, China Railway Group jumped 5 percent, while China Railway Construction Corp ended up 3.5 percent.

Investors were also looking to President Donald Trump's first face-to-face meeting with Chinese President Xi Jinping later this week, with trade and security issues set to figure prominently in the talks.

"As long as they don't have huge conflict, the meeting won't have much impact," said Alex Wong, Hong Kong-based director of Ample Finance Group.

The market was largely unfazed by a private survey which showed activity in China's service sector expanded at its weakest pace in six months in March, hurt by slower growth in new orders and intensifying cost pressures.

"Investors are generally optimistic about consumption and the real estate sector," Wong said, adding that the Hong Kong and China markets were expected to outperform global peers.

A flurry of data in coming weeks is expected to show solid economic growth in China in March, though many analysts expect the pace to moderate in coming months as the impact of earlier stimulus fades and measures to cool the heated property market start to bite. (Reporting by Luoyan Liu and John Ruwitch; Editing by Kim Coghill)

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