China shares post biggest gain in a year

China shares jumped more than 3 percent on Wednesday - their biggest daily gain in a year - as financials and property rallied on hopes that the government is taking steps to boost those two pivotal sectors. Shares in finance and property have been beaten down in 2011, and investors appeared happy to latch onto encouraging signs and market talk.
Speculation that the country's sovereign wealth fund was again supporting bank shares gave a lift to Shanghai shares and helped Hong Kong's Hang Seng index reverse an earlier decline. Hopes that Chinese authorities would take steps to bolster confidence in financial shares rose on Monday when Central Huijin, the domestic investment arm of the country's sovereign wealth fund, was reported to be raising its stakes in the "Big Four" Chinese banks.
Wednesday's developments continued to underpin the rally in Chinese banking shares, still trading at record low valuations. Five days of gains for the Hang Seng has seen it bounce 12.8 percent from a 2-1/2 year low last week. It closed up 1.0 percent at 18,239.5 on Wednesday.
The Shanghai Composite closed at 2,420 with volumes for A-shares hitting the highest since August 25. Industrial & Commercial Bank of China Ltd rose 1.7 percent in Shanghai and 1.2 percent in Hong Kong. China Construction Bank Corp rose 1.6 percent in Shanghai and 2.5 percent in Hong Kong where it provided the biggest boost to the benchmark index.
The China Securities Journal cited an unnamed source as saying that Wenzhou, a coastal city in Zhejiang province, is considering seeking approval for the "general financial experimental zone", backed by the provincial government.
With the report on Wenzhou and the buying activity by Huijin, "we are seeing selective easing in various parts of the economy," said Paul Schulte, global head of financial strategy at CCB International Securities. Early weakness in the real estate sector in Hong Kong also reversed in the afternoon session after the territory's authorities announced milder-than-expected steps to ease public discontent about sky-high property prices. The property sub-index in Hong Kong which ended the morning little changed, was up 3 percent at the end of the day with Sun Hung Kai Property rising 2.3 percent and China Overseas Land jumping 5.8 percent.