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China's hard-currency B shares rose more than 1 per cent on Tuesday as an overnight surge on Wall Street helped snap a three-day fall on the domestic bourses.
But the indices were off their intraday high of about 3 per cent gains, and turnover was slow due to fears of military retaliation by the United States for the September 11 attacks and concerns about the weak global economy.
Shanghai's B-share index ended up 1.59 per cent at 148.717 points.
The Shenzhen B-share index finished up 1.66 per cent at 231.82.
Composite indices finished almost unchanged.
Shanghai's composite index dipped 1.08 points to 1,793.88.
The Shenzhen market gained a slight 3.84 point to 3,562.23.
"Investors are shying away from buying aggressively because A shares are weak, and nobody seems to know how the US attacks will develop despite the overnight rebound," said Zhai Bin of Guotong Securities.
Chinese investors, anxiously looking for market leads, bought home appliance stocks after the head of the country's biggest television maker told State television he saw hope of a recovery in the sector, brokers said.
Sichuan Changhong's A shares surged 4.74 per cent to end at 8.17 yuan (US$0.98) after Ni Runfeng said the company had received large export orders for high-end television sets, brokers said.
A company official said Changhong expected to ship about 400,000 TV sets to US markets in the coming years, but she declined to say how much that would boost Changhong's bottom line.
Other home appliance makers were also favoured. The A shares of China's largest refrigerator maker, Qingdao Haier, ended up 2.35 per cent at 15.71 yuan (US$1.9).
Despite the rebound, brokers said markets were likely to resume their downtrend later this week as fundamentals remained bearish.
"It's not clear whether the overseas market rebound will last long, or how many more companies will be punished by regulators," said analyst Zhou Xinfeng of MF Securities. "That's why investors do not appear to be confident of the market outlook."
In other news, State media said on Saturday that police were investigating whether financial figures at camera maker Macat Optics Co were fabricated, in yet another market scandal unveiled by the China Securities Regulatory Commission.
The A share-listed company said on Monday it accepted penalties imposed by regulators but gave no specifics.
Macat's A shares closed down 4.89 per cent after shares were suspended from trade on Monday for the announcement. The stock had slid more than 21 per cent since August 24, when the camera maker announced it was under regulatory investigation.
On the foreign exchange market in Shanghai, China's yuan inched down against the US dollar as domestic banks bought dollars on behalf of importers, dealers said.
The yuan finished at 8.2772 to the dollar versus Monday's 8.2770. It moved in a narrow range of 8.2770 to 8.2773, within its normal wafer-thin trading band of 8.2770 to 8.2800.
Turnover fell to US$320 million from a heavy US$380 million.
"There was continuous dollar buying by domestic banks, apparently for importers," one US bank dealer said. "This kept the yuan relatively weak today."
Dealers said that Tuesday's weakness did not represent a downward trend and that the yuan was likely to remain firm in the near term.
The yuan has moved around 8.2770, the strong end of its usual tight band, since the start of this year, buoyed by China's healthy trade surpluses, which are key to dollar supply on the foreign exchange market.
The yuan is convertible only on the current account.
Trade firms are required to sell most of their hard currency income to domestic banks and buy it from the banks on the basis of import documents. Banks balance their positions on the Shanghai-based foreign exchange market.
(China Daily 09/26/2001)
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