Chinese shares surged sharply in morning trade on Monday
following a rally on the Wall Street and news of improving weather
in the country's snow-hit regions.
The benchmark Shanghai Composite Index rose 269.35 points, or
6.23 percent, to close at 4,590.12 points in the morning session.
On last Friday, the index lost 1.43 percent to 4,320.77, the lowest
closing in six months.
The Shenzhen Component Index ended up 1,063.88 points, or 6.74
percent, to 16,840.75.
Only two losses were registered in the two bourses that saw
aggregate turnover shrink to 89.1 billion yuan from the whole-day
140.1 billion yuan on the previous close.
Wall Street rallied last week with the Dow Jones Industrial
Average gaining more than 0.7 percent on Friday. Microsoft Corp.'s
bid for Internet provider Yahoo Inc. and a possible rescue plan for
the troubled bond insurance sector helped relieve investor worries
in the sliding U.S. economy. The index gained more than four
percent for the week, its biggest increase since March 2003.
The worst snowstorms in five decades that have plagued China's
central, southern and eastern regions added gloom to local markets
that had fallen earlier amid lingering concerns over a U.S.
recession.
The snow-hit regions could see intermittent snow and rain this
week, said the Central Meteorological Station on Monday.
Other Asian stock markets climbed on Monday on improved market
sentiment after the Wall Street rally. Japanese shares surged 2.48
percent in morning trade on the Tokyo Stock Exchange, while in Hong
Kong, the blue chip Hang Seng Index rose nearly four percent.
Heavy weights also surged. Chinalco (Aluminum Corporation of
China Ltd.), the largest aluminum company in the country, rose by
the daily 10 percent limit. The rise came after it teamed up with
U.S. aluminum giant Alcoa to buy a 12 percent stake in the
London-listed Anglo-Australian miner Rio Tinto. Sinopec rose 6.51
percent while China Ping An was up 6.26 percent.
The banking sector rose more than eight percent. Shanghai Pudong
Development Bank Co., Ltd. climbed 9.97 percent while China
Merchants Bank was up 8.96 percent.
Coal stocks rose on supply shortages caused by the heavy snow
that has disrupted transport and increased demand. China Coal
Energy Co. Ltd. rose 7.79 percent while Shanghai Datun Energy
Resources Co. Ltd. was up 9.63 percent.
Analysts said the rise was also boosted by the approval of two
new closed-end stock funds by China Securities Regulatory
Commission (CSRC). Their introduction ended a five-month freeze on
new funds in an effort to break the fall of domestic equities.
CCB Principal Asset Management Co. and China Southern Fund
Management Co. together would raise about 14 billion yuan (1.95
billion U.S. dollars) after the Spring Festival, which starts on
Thursday.
The CSRC suspended the launch of new funds late last year in
reaction to the surging domestic stock market. The Shanghai
Composite Index nearly doubled last year.
But the benchmark index dipped to 4,320.77 points on Friday,
nearly 30 percent off its mid-October record high. Investors sold
holdings due to concerns over a possible U.S. recession.
The domestic market has experienced volatile trading in recent
weeks, with shares sinking more than seven percent on Jan. 22, the
largest percentage loss in 7.5 months.
More than 60 percent of the investment funds in China had losses
in the fourth quarter that totaled 72.1 billion yuan. Figures from
TX Investment Consulting Co. indicated that 215 funds managed by 58
companies disclosed losses in their fourth-quarter reports. These
losses were the first for Chinese funds as a whole since the end of
June 2005 when the stock market began a bull run.
In currencies, the central parity of RMB against U.S. dollar was
7.1923 yuan to one dollar, according to China Foreign Exchange
Trading System. It had hit a new high to a central parity rate of
7.1853 yuan to one dollar last Thursday, following an overnight key
interest rate cut in the United States.
(Xinhua News Agency February 4, 2008)
