A strong showing by China's market bellwether Shanghai Automotive helped the key stock index stage a technical rebound yesterday from a three-month closing low, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares open to foreign investors and yuan-denominated A shares, closed up 1.01 percent at 1,499.682 points after finishing on Tuesday at its lowest since late March.
The Shenzhen sub index also climbed up 1.17 percent to 3,263.96 points.
Shanghai Auto's A shares were one of the top gainers and most active issues, jumping 4.01 percent to 12.72 yuan (US$1.54), buoyed by a recommendation by a major brokerage, brokers said.
BOC International predicted the auto parts producer would post strong results over the next two years on the back of a booming domestic vehicle industry, brokers said.
The forecast boosted Shanghai Auto, whose shares had already doubled since the start of 2003 as investors favored auto stocks due to a rosy outlook of the sector.
"Renewed strength in Shanghai Auto sparked a buying spree in shares of other vehicle stocks, helping the broad market stage a decent rebound," said analyst Shao Rui at Shanghai Securities.
Investors have favoured the booming auto and steel sectors this year. Steel maker Baoshan's share have been up about 26 percent since the beginning of this year.
"While the broad market was weak, investors selected auto and steel companies due to their strong corporate fundamentals," said Dai Yizhong, an analyst at Guotai Jun'an Securities.
B shares in China's biggest minivan maker, Chongqing Chang'an Automotive, were the most active on the hard-currency markets, closing up 3.62 percent at HK$6.58 (84.35 US cents).
Chang'an Auto's gains helped Shenzhen's B-share index rise 0.69 percent to 217.20 points. Shanghai's B shares ended up 0.82 percent at 113.206.
Despite yesterday's rebound, the Shanghai composite index has fallen 4.28 percent since mid-June on fears of a crackdown on the illegal use of bank loans to buy stocks and worries about corporate earnings ahead of the interim results season.
Analysts said they saw some more technical buying in the near term as recent falls had capped the downside, but there was little chance of an immediate market recovery.
"The rebound today did not come in decent volumes, indicating that the market had not reversed its overall weakness," said analyst Hu Weitao at Eagle Securities.
Analysts said they expected the composite index to move narrowly between 1,460 and 1,520 over the next few days.
Shenzhen's A index edged up 0.71 percent to 429.42 points and Shanghai's added 1.01 percent to 1,570.234.
China's yuan ended a notch weaker at 8.2775 against the dollar yesterday, staying firm within a government-set trading range, dealers said.
The yuan moved narrowly between 8.2773 and 8.2776 throughout the session. Turnover, thin at US$470 million on Tuesday, was not immediately available.
Over the past two years, the yuan has hovered near the firm end of the wafer-thin trading range of 8.2760 to 8.2800 the central People's Bank of China usually enforces, buoyed by healthy trade surpluses and strong foreign investment.
(China Daily July 3, 2003)
