Chinese stock markets rose Monday as investors displayed
increasing confidence despite an announcement the
reserve-requirement ratio for commercial banks will rise again.
The benchmark Shanghai Composite Index rose 70.16 points, or
1.38percent, to close at 5,161.92 points.
The Shenzhen Component Index on the smaller Shenzhen Stock
Exchange ended at 17,096.51 points, up 346.09 points, or 2.07
percent.
Gains outnumbered losses by 774 to 46 in Shanghai, and by 597 to
41 in Shenzhen.
The combined turnover of the bourses increased to 163.80 billion
yuan (22.1 billion U.S. dollars) from 107.98 billion yuan the
previous trading day.
The enlarged trading volume indicated investor confidence had
returned and now was an ideal opportunity to enter the market.
The People's Bank of China, the central bank, announced Saturday
that it would raise the reserve-requirement ratio by 1 percentage
point for commercial banks in effort to cool the overheating
economy. The rise, the 10th this year, would take effect on Dec.
25. It would push the ratio to 14.5 percent, a new high.
"It helps settle down investors who have been worried about
possible government policies to rein in liquidity," said an analyst
with the Shanghai-based Tebon Securities. "The one percentage point
rise, much higher than the previous ones, means there will be no
other tight monetary policies to come out in a short period."
China was also expected to expand the investment quota of
Qualified Foreign Institutional Investors (QFII) from 10 billion
U.S. dollars to 30 billion U.S. dollars by year end. Analysts
believed it would help boost domestic shares.
The steel sector continued its rise of late on Monday with
Baoshan Steel up 0.96 percent to 16.88 yuan and Baotou Steel
increasing 3.64 percent to 7.69 yuan.
China Railway Group, which made a strong debut on the Shanghai
bourse last Monday, rose 2.49 percent to 8.65 yuan.
The banking sector was slightly influenced by the increased
reserve requirement ratio with the Industrial and Commercial Bank
of China falling 0.48 percent to 8.32 yuan and China Construction
Bank down by 0.38 percent to 10.38 yuan.
(Xinhua News Agency December 11, 2007)
