Stocks rise as premier inspires investor confidence

University teacher Li Ping yesterday decided to invest 30,000 yuan in leading banks - his first foray into stocks since pulling out of the market last July.

Like millions of individual investors, the 30-year-old was inspired by Premier Wen Jiabao's annual address to the top legislature, in which he pledged to propel capital market reform and maintain stability in the equity market.

"We can see the central government's determination to spur economic growth and maintain market stability. It largely eased our concerns about the riffles caused by Wall Street's sharp falls recently," Li said.

The premier's positive thrust fired investor hopes for an early economic recovery and triggered heavy trading in the mainland stock market, pushing the key indicator up 1.04 percent yesterday. On Wednesday, stocks surged 6.12 percent in anticipation of further stimulus measures.

The Shanghai Composite Index closed at 2221.08 points, with turnover ballooning to 154.1 billion yuan from Wednesday's 127.5 billion yuan.

"We, as individual investors, are very sensitive to politics, and more government spending will undoubtedly generate more momentum in the market," said Zhang Tao, a 28-year-old salesman in Shanghai.

"We do believe the annual meetings (of the NPC and the CPPCC) will deliver more good news," Zhang said.

But not all investors felt as assured, and some economists and stock analysts expressed disappointment that no new stimulus measures were announced.

"While financial markets had anticipated additional fiscal stimulus measures, in one form or another, the premier's report today did not deliver, except for reiterating the supportive macro/industry-specific measures that have already been announced," said Frank Gong, chief economist at JP Morgan Securities (Asia Pacific) Limited.

"The market was disappointed with the absence of new fiscal measures, and that's why we saw the key index fall into negative territory several times (before ending on a positive note)," said Wu Feng, an analyst with TX Investment Consulting.

The likely further cut in stamp duty will largely boost investor sentiment, he said.

Shang Fulin, head of the China Securities Regulatory Commission, told reporters on the sidelines of the NPC that "there is room for a further stamp duty cut" this year.