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The Shanghai and Shenzhen bourses rebounded yesterday after seven days of straight falls amid liquidity concerns.
The Shanghai composite index soared 66.610 points to 1,986.928 as turnover stood still at 9.53 billion yuan (US$1.15 billion).
The Shenzhen composite sub-index surged 114.40 points to 4173.41 with 5.96 billion yuan (US$719.4 million) traded, a bit down from the previous session's 6.31 billion yuan (US$762.4 million).
A Jinxin analyst said the market rebounded dramatically because it had not been hard for investors to push the market up after seven-day straight falls with almost no market expansion.
She added that the market had touched its short-term floor after seven days' loss.
But the analyst said concerns over listing of State shares and new shares were the superficial causes of the falls and fears of market regulators' inspection into illegal liquidity were the root.
"Before the situation gets clear, the market is unlikely to walk out of the cautious sentiment and any rebound is to be limited and volatile," she said.
The hard-currency B shares also clawed back some ground.
The Shanghai B-share index rose 2.26 per cent to end at 168.59 points as turnover climbed 16 per cent to a moderate US$153.95 million.
The Shenzhen B-share index gained 3.04 per cent to close at 283.47 on slightly lower turnover of a thin HK$380.84 million (US$48.83 million).
Domestic A shares, off limits to foreign investors, leapt more than three per cent to end a week-long downward spiral caused by investor worries that a raft of new share offerings and a government probe into bank funds used for stock speculation would sap liquidity.
The concerns still hang over the market, but after the falls Chinese speculators were more than anxious to make quick profits.
In one day, they turned Yizheng Chemical Fibre Co (1033.HK) (600871.SS) and Sinopec Shanghai Petrochem (0338.HK) (600688.SS) (SHI.N) from the biggest decliners into the best performers.
Both counters had plunged after earnings warnings on Tuesday.
Yizheng soared the 10 per cent daily limit to 7.01 yuan (84.66 US cents) after tumbling 10 per cent on Tuesday. Shanghai Petrochem also surged the limit up to close at 4.75 yuan (57.36 US cents) after an 8.67 per cent drop on Tuesday.
But investors punished Shanghai Worldbest Co (900940.SS) yesterday, driving its B share down 7.27 per cent to US$0.765 after the chemical fibre and textile maker reported a 4 per cent decline in 2001 interim profits.
Worldbest said its net profits fell 4.34 per cent to 60.36 million yuan (US$7.29 million) for the first half of 2001 even as turnover shot up nearly 29 per cent to 946.92 million yuan (US$114.4 million).
Brokers said B shares, which have been on a pretty steady downward trend for two months in the absence of fresh government policy incentives, shadowed their A-share counterparts.
The technical rebound, however, was unlikely to be sustained as most investors still preferred staying on the sidelines while the near term market trend was unclear.
"Market sentiment has improved little, so the upside for the index is limited," said an analyst of Beijing Securities.
The Dow Jones China 88 Index increased 4.25 points to close at 158.15 yesterday.
The Dow Jones Shanghai Index soared 7.03 points to end at 230.46.
The Dow Jones Shenzhen Index climbed 7.60 points to finish at 224.97 yesterday.
(China Daily 08/02/2001)
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