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China's shares closed up yesterday in a mild technical rebound helped on by a rise in market heavyweight China United Telecommunications Corp Ltd.
Shanghai's benchmark composite index climbed 7.625 points, or 0.50 percent, to finish at 1,531.676, while Shenzhen's sub-index rose 11.31 points, or 0.36 percent, to 3,118.35.
Yuan-denominated A shares in China Unicom, reserved for domestic investors, outperformed the markets to close up 2.38 percent at 3.01 yuan (US$0.362).
After a mediocre debut last week, brokers said China's No 2 cellular carrier attracted investors yesterday due to the low absolute price of its shares.
Unicom is the lowest priced A share, followed by Maanshan Iron and Steel Co, whose A share closed at 3.23 yuan (US$0.389) yesterday, up 0.94 percent.
"Monday's rise was a technical rebound helped by Unicom's strong performance," said analyst Yang Weidong of MF Securities.
"Despite the rebound, we still cannot see anything encouraging for the overall stock market."
Market sentiment remained weak as share indices have fallen 8.5 percent since September 3 due to factors that include frequent A share IPOs, poor corporate earnings and an official crackdown on market irregularities, analysts said.
Floor traders said there was speculation in chronic loss makers after travel agent Hainan Dadonghai Tourism (Holdings) Co Ltd said its shares would resume trade on Friday.
Dadonghai, which was in the red from 1998 to 2000, said yesterday the Shenzhen exchange gave approval for its A and B shares to resume trading after it reported a tiny 2001 net profit of 1.78 million yuan (US$215,000).
Buoyed by the news, punters pushed loss-making chicken breeder Dajiang Group Co up 2.06 percent to US$0.594 to become the star performer on the Shanghai B market.
Another loss maker, property developer Jiangsu Xincheng Co, was Shanghai's second biggest gainer with a rise of 2.03 percent, followed by Jinan Qingqi Motorcycle Co, which ended up 1.75 percent.
Chinese punters often speculate on State-owned firms with poor earnings as their share prices are low, offering the possibility of big gains if the government steps in to help restructure the firms.
"Loss makers led Monday's rally, but past experience shows rallies based on gains in such companies can never last long," said analyst Huang Xiaopeng at Qinghai Securities.
On the foreign exchange market yesterday, China's yuan strengthened two ticks against the US dollar to 8.2767 in active trade as exporters sold hard currency earnings, dealers said.
Turnover was a busy US$640 million, although down from a heavy US$740 million on Friday.
"There were a lot of people selling today," said a dealer at a State-owned bank in Beijing.
Domestic exporters are required to sell most of their hard currency earnings to commercial banks designated to trade on the national forex market.
The yuan's value is driven primarily by trade since it is fully convertible only on the current account.
Dealers said they expected the yuan to stay near 8.2770 - towards the firm end of its thin band - due to China's rosy trade surplus.
The average daily forex turnover reached a record high of US$394 million in the July to September quarter, 30 percent more than a year earlier, the official Xinhua News Agency said yesterday, quoting the Shanghai-based China Foreign Exchange Centre.
(China Daily October 15, 2002)
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