Stocks News
- Shares end higher despite rate hike
Date: 24-Dec-2007 Sources: (Shenzhen Daily)
THE resumption of mutual fund sales drove up demand for blue chips Friday, helping the mainland's main index to end higher despite the government's latest monetary policy tightening.
Property developers headed lower after the central bank Thursday raised benchmark yuan interest rates for the sixth time this year.
The benchmark Shanghai Composite Index ended up 1.15 percent at 5,101.78. The Shenzhen Composite Index rose 1.4 percent to 1,375.89.
'Notice that blue chips are up today. This is because large mutual funds, which have been selling new units to subscribers since last Friday, are buying blue chips,'said United Securities analyst Yang Weicong.
Domestic media reported that seven large domestic mutual funds would be selling units to new subscribers.
Analysts and traders said no mutual fund had been allowed to sell new units since mid-October, when the benchmark index surged to a record of 6,124.04, and analysts said the resumption of mutual fund sales signaled that the government was comfortable with allowing share prices to rise further.
Among blue chips, Bank of Communications gained 1.2 percent to 14.92 yuan (US$2.02), Air China rose 3.7 percent to 25.99 yuan, and Aluminum Corp. of China jumped 3.4 percent to 38.98 yuan.
Property firms were hit by the latest interest rate hikes.
The central bank said Thursday it would raise the one-year yuan lending rate 18 basis points to 7.47 percent from 7.29 percent, and increase the one-year yuan deposit rate 27 basis points to 4.14 percent from 3.87 percent.
'The hike in the one-year lending rate is expected to hit real estate developers. They do lots of short-term lending, and the hike will add to their costs. However, the sector didn't drop a lot today because it has already been correcting recently,'said CSC International Holdings strategist Amy Lin.
China Vanke dropped 0.3 percent to 28.30 yuan after shedding 14 percent over the past two weeks.
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