Stocks News
- Shares hit new high in record turnover
Date: 29-May-2007 Sources: (Shenzhen Daily)
STOCKS on the mainland surged to an all-time high in record turnover yesterday as individual investors continued to pour fresh money into the market despite increasing caution among some institutions.
'The basic trend of the stock market is still upwards,'said Zhou Lin, analyst at Huatai Securities, adding that concern the market might be overvalued could not in the short term reverse the huge amounts of new money entering stocks.
The Shanghai Composite Index jumped at the opening and hit a record intra-day high of 4,283.93 points before ending the day up 2.21 percent at 4,272.11.
Gainers overwhelmed losers by 747 to 122. Turnover in Shanghai A shares totaled 251.8 billion yuan (US$33 billion), exceeding the previous record of 250.6 billion hit May 9.
Traders said there was no major, fresh news behind the gains, but individual investors were encouraged by the market's strength last week in the face of an interest rate hike and former U.S. Federal Reserve chairman Alan Greenspan's warning that stocks were dangerously overvalued.
Some local institutional investors are committing less money to the market, and some foreign institutions are clearly cutting their exposure to A shares considerably, analysts said.
'The quarterly reports on listed shares held by foreign institutional investors, and many other signs, show they are pulling money out,'said Wu Feng, analyst at Tianxiang Investment Consulting.
Citigroup said in a report that China country funds, which include Hong Kong-listed H shares and red chips plus some B shares, saw a net outflow of US$253 million in the week May 17-23, bringing the outflow for the past four weeks to US$1.23 billion.
But many domestic individual investors dismiss Greenspan's view as misguided. With individuals accounting for some 80 percent of daily turnover, massive retail interest in stocks may keep prices rising for a while.
Some traders talk about the index hitting 4,500 points in coming weeks, though authorities have already shown signs of wanting to cool the market and such a rise could prompt further official action, such as stronger efforts to clamp down on illicit fund flows into stocks.
Continued appreciation of the yuan against the U.S. dollar is helping sentiment. The yuan edged up above 7.65 yesterday for the first time since its revaluation.
Sinopec led the index up, jumping 5.40 percent to 13.07 yuan after Xinhua reported that China had found big gas reserves near Sinopec's Puguang field in Sichuan Province.
Insurance shares rose sharply after domestic newspapers reported the government was removing remaining regulatory obstacles to their investment in real estate.
Ping An Insurance climbed 4.13 percent to 64.48 yuan and China Life Insurance rose 3 percent to 40.20 yuan.
The coal sector was also strong, with Hengyuan Coal Industry Co. up 8.16 percent to 27.56 yuan. Traders said the coal sector appeared to be one of the few areas where foreign investors were still buying actively.
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