China stocks ended more than 1 percent higher on Monday, led by resource shares, as lower-than-forecast inflation data fanned optimism Beijing will continue with loose monetary policies. The bluechip CSI300 index rose 1.4 percent, to 3,230.10, while the Shanghai Composite Index gained 1.7 percent, to 3,033.96 points. Chinese market gains had been curbed by fears that accelerating inflation would limit room for monetary easing, after the consumer price index (CPI) in February rose at its fastest pace in more than a year.
But that concern eased a bit after the annual March consumer price figure came out surprisingly unchanged from the previous month at 2.3 percent, while wholesale prices remained stubbornly in deflation, down 4.3 percent, although the pace of decline eased. Most sectors rose, with energy and raw material shares among the biggest gainers. "The CPI data is lower than expected, so investors now expect further monetary easing to come," said Zhu Bin, analyst at Southwest Securities Co.
While some economists felt the CPI trend would not become a constraint on policy in the near future, others said worries about persistent factory gate price declines had eased somewhat, suggesting that the pace of monetary easing may slow. Most sectors rose in China and Hong Kong, with energy and raw material shares among the biggest gainers. Brokerage shares mostly rose sharply on the mainland, after China's securities regulator said on Friday it would revise risk-management rules for the securities industry - a development seen by many investors as being generally positive.