CHINA’S blue-chip CSI300 index jumped to a four-month high yesterday, led by broad rallies in real estate, banking and consumer plays as investors scooped up modestly priced big caps.

    The CSI300 index, which tracks the largest listed companies in Shanghai and Shenzhen, rose 2.6 percent to 3,865.96, the highest close since Aug. 19. The Shanghai Composite Index gained 1.8 percent to 3,642.47 points, a four-week high.

    Analysts said the rally was inspired by a recent wave of share acquisitions by yield-seeking insurance firms, highlighted most recently by the high-profile battle for control of Shenzhen-based developer China Vanke Co.

    Vanke kicked off plans for a major restructuring after chairman Wang Shi said he did not welcome Baoneng Group, the property and insurance group that recently became its largest shareholder.

    Vanke shares had soared before they were suspended from trading pending an announcement of restructuring details.

    “Investors are looking for the next Vanke,” said Chang Chengwei, analyst at brokerage Hengtai Futures.

    “They’re looking for companies with low valuations, high dividends, and healthy cash flows, hoping they would become insurers’ next target.”

    Bosera Asset Management said yesterday that insurers could potentially channel more money into the stock market and advised investors to increase allocation into big caps.

    Gemdale Corp. and Xinjiang Goldwind Science & Technology Co., partially owned by insurers, rose their 10 percent daily limit.

    Investors also bought into blue chips such as Gree Electric Appliances and Inner Mongolia Yili Industrial Group, betting they could also become acquisition targets due to their fragmented shareholding structures.

    However, some investors questioned the sustainability of the blue-chip rally, citing liquidity constraints and economic weakness.

    Hedge fund house Wellspring Capital said that the fresh batch of initial public offerings this week, expected to freeze 1.7 trillion yuan (US$262.34 billion) in capital, could have a short-term impact on market liquidity. (SD-Agencies)