Stocks News
- Shares hit record high despite rate hike
Date: 22-May-2007 Sources: (Shenzhen Daily)
THE domestic stock market shrugged off the central bank's latest tightening measures yesterday, with airline companies and coal miners leading the key index to another record close.
The benchmark Shanghai Composite Index, which tracks both A and B shares, ended up 1 percent at 4072.23, its highest ever settlement. The Shenzhen Composite Index rose 2.1 percent to 1181.42, also a record close.
Both indexes were down 3.2 percent at the opening, after the People's Bank of China said Friday it would raise deposit and lending rates, hike banks' reserve requirement ratio and widen the U.S. dollar-yuan trading band. But the indexes quickly recovered their losses as demand emerged on dips.
Analysts generally expect the benchmark index to move around the key 4000 level in the near term, as the central bank's latest move wasn't enough to prompt a sharp correction.
Yang Weicong, a strategist at United Securities, said the central bank will likely study the market's reaction to the latest steps before it resorts to further tightening, which should limit the market's downside.
Airlines surged yesterday as investors read into the positives behind the band-widening news, said Zhang Gang, a strategist at Central China Securities. He said a broader trading band could lead to faster yuan appreciation, reducing the burden of foreign debt on most carriers.
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