2014.11.0304:04:14UTC+00Chinese stocks on five-day winning streak, SOE reforms anticipated

Chinese stocks rallied for a fifth consecutive day as speculations of state-owned enterprise reform accelerating overpowered the manufacturing and service industries poor report.

The Shanghai Composite Index added 0.6% to 2,434.54, 1:13 pm, Hong Kong time. The index is set for a record close last seen in May of 2012 as the state-owned enterprise is believed to be accelerating with Guangzhou Shipyard International Co. and Sichuan Changhong Electric Co. buying assets. Meanwhile a slew of Chinese data including manufacturing and services that both were worse-than-expected. Manufacturing growth data for October is evidently slower while the services industry gauge is at its lowest in nine months.

PetroChina Co. tumbled by 1.3%. Guangzhou Shipyard surged by 60%, the daily limit in Shanghai, in Hong Kong while Sichuan Changhong Electric Co. jumped by 10%. Meanwhile, President Xi Jinping’s visit to the pilot development zone in Fujian bolstered the Zhongfu Straits (Pingtan) Development Co. who was based there.

Fund manager at Dragon Life Insurance Co., Wu Kan, commented to Bloomberg that the market is focusing more on reform progress rather than the macro-economic data. Kan adds that the SOE reforms are the main catalysts for the equities currently.

Asian stocks swung from gains and losses with the regional benchmark index stepping down from its month-high dragged by South Korean declines and China’s PMI data but bolstered by Japanese stimulus. The Bank of Japan announced last week that voters voted 5-4 to increase monetary target expansion to 80 trillion yen or $726 billion. Earlier in the week, stocks has already bolstered due to the $1.2 trillion pension fund increase to bolster shares following the stronger-than-expected US economic growth from the Government of Pension Investment Fund. The monetary hike may trigger a global liquidity increase spurring speculations of increased demand for assets with higher risks such as Brazilian equities.