|
China's stocks closed mixed yesterday after hard currency B shares fell, but the benchmark Shanghai composite index edged up on buying by brokerages and mutual funds on the eve of the 16th National Congress of the Chinese Communist Party.
Shanghai's B index ended down 0.71 percent at 134.116 points while Shenzhen's fell 0.67 per cent to 206.44.
Turnover on the B-share markets, open to foreigners, was tiny at US$10.01 million in Shanghai and HK$52.74 million (US$6.98 million) in Shenzhen.
But the Shanghai composite index, which also includes domestic A shares, off limits to foreigners, edged up 0.11 percent to 1,554.237 points due to institutional buying late in the session, brokers said.
"Institutional investors supported the markets ahead of the Congress," said analyst Zhang Qi of Haitong Securities.
"Such support is likely to allow share indices to rise further, but only slightly, during the congress," he said.
Insulated China investors ignored an overnight cut in US interest rates by the Federal Reserve.
They sold poor earners such as motorcycle manufacturer North Jianshe Co, which posted a loss for the first nine months of this year after losing money last year.
The Shenzhen-listed firm was the biggest B-share decliner, with a fall of 2.13 percent to HK$2.76 (37 US cents).
Construction material maker Shanghai Lingyun Curtain Wall Co, which posted a net loss for the first time for the July-September period, was Shanghai's biggest B share faller and closed down 1.64 percent at 66 US cents.
Except for a technical rebound earlier this week, China shares have generally fallen since early September due to a raft of worries ranging from low liquidity to an official crackdown on corruption to a long list of companies waiting to go public.
"Institutional support helped the key index end up slightly today, but there was little follow-through buying due to weak sentiment," said United Securities analyst Ling Chaoyu.
"We still expect some short-term gains due to the congress, but the medium-term trend is not optimistic," he said.
Analysts said the Shanghai composite index was likely to rise 2 to 3 percent to about 1,600 points on institutional window-dressing buying.
On the foreign exchange market, China's yuan ended flat at 8.2771 against the US dollar yesterday after being shackled to an extremely tight range, ignoring an overnight cut in US interest rates by the Federal Reserve.
Most deals were clinched at either 8.2770 or 8.2771, dealers said, towards the firm end of the Chinese currency's usual trading band due to an adequate supply of dollars from China's strong exports performance.
Turnover fell to a moderate US$540 million from an active US$700 million on Wednesday.
"Demand and supply were quite balanced during the session, and the earliest deal was conducted at 8.2771," said a dealer based in Beijing.
"Trade was not greatly influenced by the drop in US interest rates, mainly because the central People's Bank of China tightly monitors the yuan's trend," she added.
The yuan's value is driven primarily by trade flows since it is fully convertible only on the current account. The central bank usually keeps the yuan within a 40-notch band, citing currency stability as a key platform for China's economic policy.
Because the yuan is pegged to the greenback, China has often matched Fed interest rate moves with similar changes to its own US dollar bank interest rates.
Analysts said this meant the Fed's latest cut of half a percentage point should in theory boost the strength of the yuan, but the Shanghai-based national foreign exchange market was too rigidly controlled by regulators to reflect that.
(China Daily November 8, 2002)
|
