China's stocks fluctuate after economic growth data

[HONG KONG] China's stocks swung between gains and losses after the release of economic growth data.

The Shanghai Composite Index slipped 0.1 per cent to 3,387.37 at 1.14pm, erasing an advance of as much as 1 per cent. Technology and telecom companies, the best performers over the past week, led declines. Brokerages climbed as share turnover jumped to a seven-week high and margin debt increased for a seventh day.

China's gross domestic product rose 6.9 per cent in the three months through September from a year earlier, the National Bureau of Statistics said Monday, beating economists' estimates for 6.8 per cent. Still, that was the slowest quarterly expansion since the first three months of 2009 and less than the government's target of 7 per cent for this year. Industrial output in September rose 5.7 per cent, trailing estimates.

"Sentiment is positive on hopes for some more stimulus as the growth number beats the estimate but it's still less than the government target," said Yen Chiu, a Hong Kong-based trader at Shenwan Hongyuan Group Co.

STIMULUS SPECULATION

The Shanghai Composite surged 6.5 per cent last week for the steepest weekly gain in four months as traders speculated the government will accelerate reforms of state-owned companies and loosen monetary policy.

The market's recent rebound continued to lure back investors, with Friday's turnover jumping to the highest level since Sept 2 and margin debt capping the longest stretch of gains in two months. Trading volumes in Shanghai soared 47 per cent above the 30-day average for this time of day.

Hong Kong's Hang Seng China Enterprises Index slipped 0.3 per cent, while the Hang Seng Index lost 0.5 per cent. The CSI 300 Index increased 0.1 per cent.

The Shanghai Composite has risen 16 per cent from an August low amid speculation that policy makers will introduce more measures to boost growth after a rout in equities that erased almost US$5 trillion of market value. The government has cut interest rates five times since November and boosted infrastructure spending in recent months.

NUCLEAR STOCKS

China's services sector propped up the economy, suggesting monetary and fiscal stimulus is keeping Premier Li Keqiang's 2015 expansion target within reach. Retail sales increased 10.9 per cent last month, exceeding the 10.8 per cent gain forecast. Industrial output missed the estimate of 6 percent growth. Fixed-asset investment climbed 10.3 per cent in the first nine months from the same period last year, compared to a median projection of a 10.8 per cent increase.

A "sluggish" world economy is weighing on growth, President Xi Jinping said in an interview with Reuters over the weekend. China isn't immune to the lackluster performance of the global economy, Mr Xi said.

The Communist Party of China Central Committee will hold a key meeting during Oct 26-29 to deliberate on an economic and social development plan for China over the next five years, according to the Xinhua News Agency.

Margin traders increased holdings of shares purchased with borrowed money on Friday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising 0.3 per cent to 602.5 billion yuan (S$131.1 billion).

Gauges of telecom and technology companies in the CSI 300 slid at least 0.8 per cent for worst performance among 10 industry groups. China United Network Communications Ltd and Shanghai Wangsu Science & Technology Co both dropped 3.5 per cent.

Citic Securities Co rose 1.3 per cent, while Western Securities Co. surged 9.9 per cent. China National Nuclear Power Co. increased 3.8 per cent in Shanghai.

The UK and China are set to announce a deal that will give the Asian nation a stake in Electricite de France SA's Hinkley Point project, Britain's first nuclear plant in three decades.

BLOOMBERG