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China's B shares closed higher yesterday as a surge in industrial sewing machine maker Shanggong Co <900924.SS> triggered a broad rebound after a 10-week downtrend, brokers said.
Shanghai's hard currency B share index jumped 2.14 percent to 125.898 points in thin trade, while Shenzhen's climbed 1.93 percent to 193.07.
Turnover on the B share markets, open to foreigners, was only US$12.4 million in Shanghai and 58.3 million Hong Kong dollars (US$7.47 million) in Shenzhen.
Shanghai-listed Shanggong was the biggest gainer, rallying 5.83 percent to US$0.653 after state newspapers played up its plan to issue additional B shares, although volume was moderate with 1.31 million shares changing hands.
The company said over the weekend it would issue new B shares worth US$50 million to Germany's FAG Kugelfischer AG and other investors, a rare event for the tiny US$11 billion B share market which had not seen an initial public offering since October 2000.
"Shanggong sparked technical buying, which focused on Shanghai-based companies initially but spread to other shares," said a senior analyst at Shanghai Securities.
"But investor sentiment remained cautious as indicated by thin trade and we expect indices to move narrowly in the near term while investors look for fresh market leads," he said.
China shares have generally fallen since early September, hit by negative factors such as poor earnings, frequent domestic A share offers and a government crackdown on market irregularities.
The benchmark Shanghai composite index, which groups B shares and domestic A shares - now off limits to foreign investors - has dropped 12.65 percent since September 3.
The index, which closed up 0.75 percent at 1,462.174 points, was likely to hover at the psychologically important 1,450-point level in the near term, analysts said.
"The rise on Tuesday was nothing more than a technical rebound after recent consecutive losses," said an analyst with Guotai Junan Securities.
"It does not mean the market has bottomed," he added.
In addition to Shanggong, investors also bought shares in companies with strong earnings records such as property developer China Vanke Co <200002.SZ>, Shenzhen's star performer with a rise of five per cent to HK$5.25 (67.3 US cents).
Shanghai's A share index ended up 0.72 percent at 1,527.558 points, while its Shenzhen counterpart edged up 0.88 percent to 441.57.
Home appliances maker Hisense Electronics Co <600060.SS> outperformed the markets on news its parent, Hisense Group Inc, had signed a deal with Japan's largest electronics maker, Hitachi Ltd, to set up a joint venture to make air-conditioners.
Its Shanghai A shares closed up 1.74 percent at 7.02 yuan (84.78 US cents).
The Shanghai composite index rose 10.884 points, or 0.75 percent, to 1462.174 on turnover of 25.17 billion yuan (US$3.04 million).
The Shenzhen composite sub-index climbed up 14.22 points, or 0.48 percent, to 2952.31. Turnover stood at 4.41 billion yuan (US$532.5 million).
(China Daily November 20, 2002)
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