Banking and media shares lift key index

Shanghai stocks yesterday rose for the first time in three days partly due to gains made by media plays while banks also rose after China said its inflation cooled to the slowest pace in five months.

The Shanghai Composite Index closed 0.8 percent higher at 2,524.92 points.

Bank shares gained after China’s Consumer Price Index, a main gauge of inflation, rose 5.5 percent year on year in October, marking the third consecutive month of moderating inflation, the National Bureau of Statistics said yesterday.

The Industrial and Commercial Bank of China, the country’s biggest lender, gained 0.7 percent to 4.36 yuan, and the Agriculture Bank of China added 0.8 percent to 2.66 yuan.

Gui Haoming, chief strategist at Shenyin and Wanguo Securities said in a note that there will be expectations that the Chinese government “may ease its tightening” because of the drop in inflation.

But investors may still adopt a wait-and-see attitude until they see the what measures the government will ease, given that the Shanghai index has already risen nearly 10 percent in the past few weeks precisely on hopes that the measures will be eased, Gui added.

Media counters were the biggest gainers. The sector got a boost after China chose it as an area to develop in the next five years.

Chinese Universe Publishing and Media Co rose by the daily 10 percent cap to 23.27 yuan. China South Publishing and Media Group Co gained 6.04 percent to 11.59 yuan.