Hong Kong shares surged 2.33 percent on Tuesday after China's premier said the country's economic growth must not slip below the "bottom line" of seven percent. The benchmark Hang Seng Index added 498.92 points to end at 21,915.42 on turnover of HK$66.44 billion (US $8.57 billion). Chinese Premier Li Keqiang was quoted in state media as saying at a meeting earlier this month that economic growth must stay above the "bottom line" of seven percent.
He said the target was necessary to ensure China's goal of doubling gross domestic product between 2010 and 2020, state-backed Beijing News reported on Tuesday. The comments lifted spirits as they indicated Beijing would introduce some form of economy-boosting measures should growth fall too much, as it tries to avoid a so-called hard landing.
Following publication of the remarks Chinese companies had a particularly good day. The Hang Seng China Enterprises Index, which tracks Chinese companies listed on the Hong Kong stock exchange, closed up 3.9 percent at 9,780.16, near a six-week high. Shares in mainland banks, which suffered losses at the beginning of the week when the People's Bank of China said it would remove a government-mandated floor on lending rates, surged Tuesday. ICBC rose 4.9 percent to HK$5.10 and China Construction Bank surged 4.8 percent to HK$5.70
Chinese telecom telecom equipment supplier ZTE also jumped 20 percent to HK$13.94 after the company late Monday said it posted a core profit in the second quarter, its first in a year. On the mainland, meanwhile, shares closed up 1.95 percent. The benchmark Shanghai Composite Index rose 39.12 points to 2,043.88 on turnover of 92.7 billion yuan ($15.1 billion).
Railway and infrastructure shares led the gains after reports that China may speed up railway investment. Locomotive maker CSR Corp surged 8.12 percent to 3.86 yuan while China Railway Construction jumped 7.21 percent to 4.76 yuan. Improved global prices saw Henan Yuguang Gold & Lead approach its 10 percent daily limit to end at 10.69 yuan while Zijin Mining rose 2.43 percent to 2.53 yuan. Baotou Steel Rare-Earth advanced 8.09 percent to 24.71 yuan and Xiamen Tungsten was up 4.99 percent at 29.03 yuan.
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