HK surge stimulates mainland shares ( 2003-10-22 09:13) (China Daily)
China's shares recouped early losses to finish higher yesterday, as investors
bought into firms that have listings both on the mainland and in Hong Kong on
prospects of strong results.
Brokers said A shares, open to domestic and select foreign investors, played
catch-up after their Hong Kong counterparts, known as H shares, had surged over
the past few months.
The benchmark Shanghai composite index, grouping hard-currency B shares for
foreigners and yuan-denominated A shares, reversed early losses to finish 0.35
per cent higher at 1,364.301 points.
Shenzhen's shares climbed up 12.05 to 3,128.18.
Shanghai's hard currency B shares inched up 0.41 to close at 103.74.
Shenzhen's B-share market edged up 0.66 to 254.21.
China's largest polyester maker, Sinopec Yizheng Chemical Fibre Co Ltd, which
also has H shares listed in Hong Kong, was one of the top gainers with its A
shares jumping 4.41 per cent to 4.97 yuan (US$0.6).
The company has said profits in the first nine months of this year will rise
by over 50 per cent from a year earlier.
Another H share firm, Ma'anshan Iron and Steel Co, saw its A shares close up
1.02 per cent at 3.97 yuan (US$0.48) after its net profits for the nine months
ending at September leapt to 1.69 billion yuan (US$204 million) from 250.54
million yuan (US$30.2 million) over the same period a year ago.
Ma'anshan also forecast its earnings for all of 2003 would grow by more than
50 per cent from 2002.
Despite yesterday's bounce, analysts said sentiment on the mainland markets
was still weak after a slump due to a number of negative factors from a rash of
stock offers to a tightening of bank loans.
The Shanghai index has slid 16.4 per cent since mid-April, versus a 42.8 per
cent rally in neighbouring Hong Kong.
Analysts said they expected the index to fall and test the year's low of
1,311.684 points set on January 6.
"During the recent market falls, buying in any stocks has been short-lived,"
said analyst Zhong Jingteng at Ping'an Securities.
"As there are no sustained hot stocks, the market lacks momentum to make any
decent gains," he said.
"As a result, we would not be surprised even if the index fell below the
psychologically important 1,300-point level."
There was renewed selling in banking stocks yesterday, after China's Central
Bank Governor Zhou Xiaochuan reiterated regulators would maintain their grip on
bank lending.
Huaxia Bank Co Ltd, one of the most active counters, closed down 1.7 per cent
at 6.98 yuan (US$0.84) as investors fretted over how loan tightening might
affect the banking sector.
China Merchants Bank, the biggest of the country's five listed banks by
capitalization, dropped 2.06 per cent to 9.05 yuan (US$1.09), while Pudong
Development Bank declined 2.07 per cent to 9.00 yuan (US$1.08).
On the forex market, China's yuan ended two notches firmer versus the US
dollar at 8.2765 yesterday, while intraday trading saw the currency brush up
briefly against 8.2760 - the stronger end of its managed trading range.
The one-year non-deliverable dollar forward discount versus the yuan was at
2,950 points by 0900 GMT yesterday, implying a rate of 7.983 yuan per dollar
within 12 months.
NDFs are a transaction where a forward price is agreed between a customer and
a bank, but settlement on the value date is undertaken entirely in US dollars.
The market's turnovers climbed to a heavy US$1.13 billion from US$960 million
on Monday. The yuan firmed to 7.5393 against 100 Japanese yen from 7.5759 and
strengthened versus the euro to 9.6296 from Monday's 9.6418.
