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China's shares closed up yesterday, extending a technical rebound as punters, encouraged by hopes of market-boosting steps by the government, bought into loss-making firms, brokers said.
Shanghai's composite index rose 25.317 points, or 1.85 percent, to 1,397.384. Shenzhen's sub-index climbed 45.45 points, or 1.63 percent, to 2,835.49.
Shanghai's B-share index rose 1.13 percent to 120.139 points. Shenzhen's was up 1.42 percent at 195.67.
B shares surged 3 percent on Wednesday on speculative buying by punters who are hoping the government will prop up the stock market, which is down 38 percent from its peak in June 2001.
Those hopes were prompted by news that Shang Fulin, appointed chairman of the China Securities Regulatory Commission last month, toured the Shanghai and Shenzhen exchanges early this week for the first time in his new official capacity.
"Many investors expect Shang to initiate steps to check the market's downward trend now that he has obtained first-hand information on the industry," said analyst Hu Zhiguang of China Securities.
Shanghai-listed chicken breeder Dajiang Group Co, which was in the red for the first nine months of 2002 after posting losses in 2000 and 2001, was yesterday's most heavily traded B share and one of the top gainers.
The stock closed up 2.05 percent at 45 US cents as a heavy 12.85 million shares changed hands. Chinese punters frequently speculate in companies with poor earnings, hoping for a government-led asset rescue.
Despite the latest rally, analysts said it was still too early to say if markets have reversed 19 months of weakness, the result of negative factors ranging from poor corporate results to frequent initial public offerings (IPOs).
The near-term trend will depend on whether the government announces steps to boost markets, analysts said. Shares will resume falling if no new policies appear within a few days, they added.
Chongqing Changan Automobile Co, China's biggest minivan maker, said yesterday it had cut the prices of its compact cars made in a venture with Japan's Suzuki Motor Corp, so the cars will be more competitive in the domestic market.
Its B shares closed up 2.44 percent at HK$3.78 (50 US cents) on volume of 9.34 million shares, the most active counter on Shenzhen's B-share market.
The star on A-share markets was Chinese toll road operator Anhui Expressway Co, which rose to its 10 percent limit for the second straight day to close at 5.24 yuan (63 US cents).
Anhui Expressway A shares made their debut in Shanghai on Tuesday and nearly doubled on their first day of trade, with investors citing a stable earnings record. Chinese IPOs often double upon listing as they are priced cheap to ensure demand.
Anhui Expressway's A-share price is also more than double the price of its Hong Kong shares, which closed 3.78 percent higher at HK$1.92 (25 US cents).
On the foreign exchange market, China's yuan held steady against the US dollar to close at 8.2766 yesterday as ample dollar supply from exporters maintained the Chinese currency's strength, dealers said.
The yuan was shackled to a tight range of 8.2765 and 8.2767 in active turnover of US$660 million, although that was down from Wednesday's US$750 million.
"Strong dollar supply on the market, helped by healthy foreign trade, kept the yuan near the firm end of the government-set trading range," said a State-owned bank dealer in Beijing, adding that most deals were seen at 8.2766.
The yuan, which is not freely convertible on the capital account, has mainly moved near the strong end of its tiny 8.2760 to 8.2800 trading box on the back of China's healthy trade surplus, dealers said.
Exports were strong in December as Chinese companies tend to sell more textiles and electronics overseas for the Christmas and New Year holiday season, they said.
(China Daily January 10, 2003)
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