Stocks News
- Stocks roar back, up 2.8%
Date: 9-May-2007 Sources: (Shenzhen Daily)
CHINA'S main stock index surged 2.83 percent in record turnover yesterday, buoyed by the real estate sector and oil refiner Sinopec Corp., as trade resumed after a week-long public holiday.
The Shanghai Composite Index ended at 3,950.011 points, just off its intra-day record high of 3,964.714, on turnover of 207.4 billion yuan. Gainers outnumbered losers 804 to 59, and 61 stocks in Shanghai alone rose their 10 percent daily limits.
Turnover ballooned to a record 203.2 billion yuan (US$26.4 billion) from 184.1 billion yuan last Monday, just before the holiday.
The index is up 48 percent since the start of this year, and many investors have been targeting the 4,000-point level - a target that could well be hit this week, regardless of concern that the market may be setting itself up for a substantial pull-back in the medium term, traders said.
'Sentiment among investors is still very strong - they are confident that they can make huge profits in this market,'said Guotai Junan Securities analyst Xu Yinhui, adding that rises in Hong Kong and global equities over the Chinese holiday had encouraged buyers.
The component index on the smaller Shenzhen Stock Exchange climbed up 4.93 percent, or 535.24 points, to close at 11,401.12 points on turnover of 105.7 billion yuan.
Chinese central bank chief Zhou Xiaochuan, speaking in Switzerland on Sunday, acknowledged that a bubble in the stock market was a concern and said the central bank was monitoring asset prices along with inflation.
Many in the money market expect an interest rate hike as soon as this month, possibly in response to April inflation data in mid-May. That could be a trigger for an equities pull-back.
But Xu said there is so much money in the stock market that nothing short of a clear, sustained effort by authorities to cool it down would have much effect on the bull run.
Sinopec jumped 5.3 percent to 11.92 yuan, partly on the back of yuan appreciation, which may cut the cost of imported oil.
A leap of more than 10 percent in Hong Kong-listed PetroChina during the holiday, after the firm made a big oil find in Bohai Bay, may also have sparked interest in Sinopec, since some expect PetroChina to list in Shanghai this year.
The property sector was also buoyed by yuan appreciation, as a strong yuan boosts the value of its assets. Leading real estate stock Vanke soared 10 percent to 19.89 yuan.
Food makers were strong as part of a focus on consumer-related stocks around the long holiday, which temporarily boosted companies' sales. Shanghai First Provisions climbed 10 percent to 30.00 yuan.
The 2008 Beijing Olympics was another theme, with milk maker Yili up 9.32 percent to 31.32 yuan partly because of its status as an Olympics sponsor, traders said.
Aluminum Corp. of China (Chalco), which soared 180 percent when it listed in Shanghai just before the holiday, dropped 0.54 percent to 18.41 yuan.
Its ability to avoid any major fall on profit-taking was seen as positive, as was an 8 percent rise in its Hong Kong-listed H shares in the past two days, which suggested markets were willing to narrow A shares' huge premiums to H shares by pushing up the latter rather than pulling down the former.
The National Development and Reform Commission announced it had adjusted maximum retail prices for 260 drugs, cutting 70 percent of them by an average of 19 percent. But this had little impact on the pharmaceutical sector, which rose 4.11 percent.
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