China stocks up 2.1 percent

Chinese stocks rose sharply on Monday, far outperforming slides in foreign markets, and turnover hit a one-month high because of speculation that authorities might cut the stock trading tax.
The official Securities Times reported that delegates to the Chinese People's Political Consultative Conference, an advisory body which meets alongside parliament this week, would propose adjustments to the trading tax.
It was unclear if any of the proposals would be adopted - the tax was raised last year to deter wild speculation in stocks. The newspaper said proposed changes would focus on reducing the tax burden for long-term investors, so any reform might not help the individual investors who have fled the market during its recent slump.
But authorities have since last month seemed keen to support the market - late on Friday, regulators approved the creation of yet another batch of mutual funds - and this encouraged investors to continue a rebound that began last week.
The Shanghai Composite Index ended up 2.06 percent at a one-week high of 4,438.265 points, after touching a high of 4,456.963. It is 28 percent below October's record peak.
Many analysts expect a test very soon of important technical resistance on the index's 250-day average, now at 4,501 points. Gaining stocks in Shanghai far outnumbered losers by 873 to 29, while 29 Shanghai A shares jumped their 10 percent daily limits. Turnover in Shanghai A shares shot up to a one-month high of 125.0 billion yuan ($17.6 billion) from Friday's 75.2 billion. "Hopes for the tax cut are increasing, even though most people know it is not clear if authorities will actually take this action," said Chen Jinren, analyst at Haitong Securities.
He added that investors should be cautious as the index might not stage a clean break above the 250-day average for some time. Also, shareholders in Ping An Insurance will vote on its huge fund-raising proposal on Wednesday, and passage of the plan - which might fuel fears of large cash calls by other big companies - could knock the index down again.
China Business News estimated that 371.9 billion yuan ($52.4 billion) of shares would become tradable this month as lock-up period related to IPOs and state share reforms expired, with two-thirds of that amount becoming tradable on Monday.