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China's stock market closed at its highest level in more than five years yesterday despite a decline in markets across the Asia-Pacific region triggered by the Democratic People's Republic of Korea's nuclear test. China's A shares witnessed significant gains after trading resumed following the week-long national holiday, continually buoyed by mounting expectations of a rise in the value of the Chinese currency and falling international oil prices. The benchmark Shanghai composite index closed yesterday at 1,785.385 points, up 1.88 percent from its close on September 29, its highest closing level since September 25, 2001. Turnover in Shanghai A shares was at 28.4 billion yuan (US$3.59 billion). Banking shares enjoyed great popularity yesterday with China Minsheng Banking Corp and Pudong Development Bank both jumping to the daily 10 percent limit. Minsheng bank closed at a record high of 5.93 yuan (75 US cents) after the lender won the banking regulator's approval to issue an additional 3.5 billion A shares through placement among institutional investors. The Pudong Development Bank yesterday reached 11.68 yuan (US$1.48), its highest level since late February, thanks to its sound performance over the past nine months. "The bank's comparatively low price/earnings ratio, which is currently around 14 times, provides major investment opportunities," said She Minhua, a banking analyst at CITIC China Securities. Shenzhen Development Bank yesterday jumped 6.50 percent to close at 8.69 yuan (US$1.1) as its new share reform plan helped the bank gain more popularity. Shares in Huaxia Bank increased 6.68 percent to close at 4.63 yuan (58.6 US cents) and China Merchants Bank jumped 4.53 percent to 10.39 yuan (US$1.32). She Minhua said investors had great confidence in the country's commercial banks and were willing to make long-term investments in the sector. The Industrial and Commercial Bank of China (ICBC) set a lower-than-expected price range for its dual shares sale in Hong Kong and Shanghai yesterday, but the analyst said that this did not make any major contribution towards yesterday's rise in Chinese banking shares. Other sectors such as the medical equipment and medicine industry also witnessed encouraging increases yesterday. Zhou Feng, an analyst at Shanghai-based Shenyin Wanguo Securities predicted that stocks would continue to rise this week, but the market may come under pressure in the longer term from the ICBC's initial public offering and Sinopec's resumption of trading today after its State share reform. The DPRK's nuclear test has meanwhile led to a slump in markets across the Asia-Pacific region. (China Daily October 10, 2006) |
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