Insurance News
- China Life boosts index
Date: 29-Aug-2007 Sources: (Shenzhen Daily)
A 10 PERCENT jump in the share price of China's biggest insurer pushed the benchmark Shanghai stock index up to a fresh record high yesterday, despite softness in most of the stock market.
The Shanghai Composite Index was 0.57 percent lower at midday but rose as much as 1.15 percent in the afternoon. It ended up 0.87 percent at 5,194.689 points, its seventh straight record close.
China Life Insurance, the market's second most heavily weighted stock, soared its 10 percent daily limit after reporting late Monday a 160 percent rise in first-half net profit to 23.29 billion yuan (US$3.1 billion), well above analysts' forecasts of around 16.7 billion yuan.
The stock was almost flat at midday yesterday, but surged in the afternoon because of a burst of buying that began soon after the midday break.
Traders said institutional investors might be trying to prevent a pull-back by the overall market, which had been losing steam, by pushing up a major index component.
China Life's leap boosted rival Ping An, the market's fifth most heavily weighted stock, which gained 4.20 percent to 103.44 yuan.
But losing Shanghai stocks outnumbered gainers by 494 to 354, showing the index's rise was not broad-based. Turnover in Shanghai A shares remained active at 166.1 billion yuan against Monday's 175.1 billion yuan, suggesting strong interest in profit-taking.
Before China Life's jump the market, which is up 94 percent so far this year and 16 percent higher since the start of this month, was looking as if it might start a long-awaited pull-back.
Given the huge amounts of fresh money ready to buy shares at newly created domestic mutual funds, most analysts do not expect any pull-back to be long or deep. Technical support lies around 4,900 points, where the index briefly peaked in mid-August.
'The index is unlikely to pull back sharply before the 17th Party congress,'said Zhang Qi, analyst at Haitong Securities. 'Any big drops will be met by fresh buying.'
Zhang was echoing a widely held belief that for domestic political reasons, the Party leadership will want to keep the stock market strong at least through a key meeting of the party elite which is expected in October.
Other factors, however, are not in the stock market's favor.
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