Stocks News
- Chinese shares rise as investor confidence returns
Date: 11-Dec-2007 Sources: (Xinhua Online)
BEIJING, Dec. 10 (Xinhua) -- Chinese stock markets rose Monday as investors displayed increasing confidence despite an announcement the reserve-requirement ratio for commercial banks will rise again.
The benchmark Shanghai Composite Index rose 70.16 points, or 1.38 percent, to close at 5,161.92 points.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange ended at 17,096.51 points, up 346.09 points, or 2.07 percent.
Gains outnumbered losses by 774 to 46 in Shanghai, and by 597 to 41 in Shenzhen.
The combined turnover of the bourses increased to 163.80 billion yuan (22.1 billion U.S. dollars) from 107.98 billion yuan the previous trading day.
The enlarged trading volume indicated investor confidence had returned and now was an ideal opportunity to enter the market.
The People's Bank of China, the central bank, announced Saturday that it would raise the reserve-requirement ratio by 1 percentage point for commercial banks in effort to cool the overheating economy.
The rise, the 10th this year, would take effect on Dec. 25. It would push the ratio to 14.5 percent, a new high.
'It helps settle down investors who have been worried about possible government policies to rein in liquidity,' said an analyst with the Shanghai-based Tebon Securities. 'The one percentage point rise, much higher than the previous ones, means there will be no other tight monetary policies to come out in a short period.'
China was also expected to expand the investment quota of Qualified Foreign Institutional Investors (QFII) from 10 billion U.S. dollars to 30 billion U.S. dollars by year end. Analysts believed it would help boost domestic shares.
The steel sector continued its rise of late on Monday with Baoshan Steel up 0.96 percent to 16.88 yuan and Baotou Steel increasing 3.64 percent to 7.69 yuan.
China Railway Group, which made a strong debut on the Shanghai bourse last Monday, rose 2.49 percent to 8.65 yuan.
The banking sector was slightly influenced by the increased reserve requirement ratio with the Industrial and Commercial Bank of China falling 0.48 percent to 8.32 yuan and China Construction Bank down by 0.38 percent to 10.38 yuan.
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