The composite indices of both Shanghai and Shenzhen stock exchanges jumped by more than 8 percent on Wednesday, spurred by the People’s Bank of China’s denial of a plan to increase interest rates.
All shares listed on the two bourses went up the day after the statement from the central bank’s governor; about 100 shares rose by the daily maximum of 10 percent and nearly 300 by 9 percent.
Zhou Xiaochuan said on Tuesday that the bank was not going to increase interest rates, and that no timetable exists for an interest rate hike.
The Composite Stock Index of the Shanghai Stock Exchange, which comprises yuan-denominated A shares and foreign-currency B shares, closed at 1,115.58 points, up 8.21 percent, with total a turnover of 19.9 billion yuan (US$2.42 billion).
The Shenzhen stock exchange closed at 2,936.57 points, up 8.38 percent, the biggest daily jump since June 24, 2001. The total turnover stood at 11.5 billion yuan (US$1.4 billion).
Analysts also attributed the soar to a strong rebound after the continuous fall of share prices over the past seven weeks.
Gu Jie, an analyst with Hualin Securities Co., said that another contributing factor was the news that the securities regulator plans to allow listed firms to buy back their shares, demonstrating its determination to stabilize the Chinese stock market, which hit a new eight-year low on Monday.
Wednesday's total turnover in both Shanghai and Shenzhen stock exchanges was about three times that of the daily turnover for the last few months.
Analysts said there is still room for the indices to rise in coming sessions, and investors should also watch carefully for more encouraging news. Various publications have reported that the central bank will inject money into selected securities firms, and blue chip Yangtze Hydroelectric has been selected for the latest experiment in selling state-owned shares.
The China Securities Regulatory Commission said it began to collect public opinion on Monday on the draft of a regulation allowing listed companies to buy back public shares.
(Xinhua News Agency June 9, 2005)
