SHANGHAI, Feb 11 — China’s stock-index futures rose for a third day. Mainland shares climbed yesterday as slowing inflation spurred speculation the government will further ease monetary policy to boost economic growth.

Futures on the CSI 300 Index expiring in February gained 0.7 per cent to 3,438.80 as of 9:16 am local time. Sinopec Shanghai Petrochemical Co may advance after Morgan Stanley upgraded the stock to overweight. Industrial Bank Co may fall after Hang Seng Bank Ltd said it will sell a stake for as much as US$2 billion (RM7.1 billion) to boost capital. China Shenhua Energy Co may drop after profit fell 20 per cent last year on lower coal sales.

The Shanghai Composite Index climbed 1.5 per cent to 3,141.59 yesterday. Trading volumes have been slumping ahead of the Chinese new year holidays, which start on February 18 and last for a week. Hong Kong’s Hang Seng China Enterprises Index advanced 0.4 per cent. The CSI 300 Index rose 1.8 per cent. The Hang Seng Index was little changed. The Bloomberg China-US Equity Index added 0.3 per cent in New York.

Economic policies must react if tumbling oil prices affect core inflation, the People’s Bank of China said in its quarterly report yesterday.

“Monetary policy shouldn’t over-react to oil price fluctuations,” the central bank said. “However, if fundamental changes lead to changes in the trend price of oil, or if oil price moves change inflationary expectations significantly and spread to core inflation, then macro-economic policies must be adjusted accordingly.”

The Shanghai index has gained 51 per cent over the past year, the second-best performer among 93 global benchmarks tracked by Bloomberg, spurred by an exchange link with Hong Kong and growth in margin trading.

Link prospects

It’s taken almost three months for foreign investors to pour 100 billion yuan (US$16 billion) into Chinese shares through the link with Hong Kong. Value Investment Principals Ltd says the next milestone will come more quickly.

Shanghai stock purchases through the connect surpassed 100 billion yuan yesterday as speculation that the central bank will further ease monetary policy sent the benchmark index to its biggest gain in a week. International investors have been net buyers for 16 straight days, data compiled by Bloomberg show.

Inflows will accelerate as more money managers get compliance and regulatory approval to trade through the link, according to Sandy Mehta, the chief executive officer of Hong Kong-based Value Investment Principals.

Margin traders increased holdings of shares purchased with borrowed money by the most since January 15 yesterday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising by 1.4 per cent to record 797.9 billion yuan.

The Shanghai gauge is valued at 11.7 times 12-month projected earnings, compared with the five-year average of 10.3, according to data compiled by Bloomberg.

Earnings for mainland-listed companies probably rose 10.1 per cent in 2014, down 4.8 percentage points from a year earlier, Qin Peijing, an analyst at Citic Securities Co, wrote in a report yesterday. Growth may further decelerate to 7.1 per cent this year, Citic Securities said.—Bloomberg