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China's shares jumped to two-month highs yesterday as punters bought heavily into large capitalized stocks in hope the government will issue new policies to support the markets, brokers said.
Shanghai's hard currency B-share index surged 6.76 percent to 127.489, its highest close since November 11 as turnover surged 738 percent to US$76.7 million.
Shenzhen's B index rose 5.65 percent to 205.81, its highest close since November 7. Turnover rose 479 percent to HK$345 million (US$44.23 million). B shares are open to foreigners and Chinese.
National heavyweight Sinopec Corp, China's largest refinery, soared its 10 percent daily limit to 3.39 yuan (US$0.41) after JP Morgan upgraded the company's Hong Kong-listed shares to "overweight" from "neutral" on Monday.
Analysts said there was no fresh impetus for the market's rally, although investors have been talking about possible market-boosting measures from the government ever since new top securities regulator Shang Fulin toured exchanges last week.
A China Securities Regulatory Commission spokeswoman said yesterday she was not aware of any new policies.
Some analysts said the sharp jump in share prices and trading volumes may indicate a firm rebound ahead after markets suffered a 19-month slump brought on by frequent share issues, a slew of corporate scandals and poor earnings.
"Today's rally is a good signal for market trends in the medium term and we expect the composite index to rise to above 1,500 points in the next few days," said Huatai Securities analyst Chen Huiqing.
The benchmark Shanghai composite, tracking A and B shares listed in Shanghai, rose 5.81 percent to close at 1,466.851 points yesterday, while the Shenzhen Composite sub-index closed at 2,999.40, up 6.30 percent.
But other analysts said some major uncertainties remained, such as how the government planned to unload its large stakes in listed companies, which are now untradeable and account for two-thirds of market capitalization.
"Before the government successfully handles this important matter, we cannot say the market has truly converted to an upward trend in the long term," said Shanghai Securities analyst Zhang Jun.
Large caps were the top gainers yesterday, with China United Telecommunications Corp surging 10 percent to 3.07 yuan (US$0.37). It was the most heavily traded stock on the domestic A-share markets with 197 million shares changing hands.
Investors also favored stocks in loss-making companies in the B-share markets, often a speculative focus as volatile share prices hold out the possibility of windfall gains.
Chicken breeder Dajiang Group Co, which lost money in the first nine months of last year as well as in 2001 and 2000, was the biggest B-share riser and most active stock. It rose 10 percent to $0.49 on volume of 11.7 million shares.
China's yuan closed unchanged at a strong 8.2768 against the US dollar yesterday, helped by a stream of dollar sales from domestic exporters, dealers said.
The yuan moved narrowly between 8.2767 and 8.2769. Turnover was still heavy at US$690 million, although that was down from US$800 million on Monday.
Dealers said exporters were eager to sell hard currency earnings logged in December, a strong month for exports, but the yuan's strength deterred some deals.
The yuan, which is not fully convertible on the capital account, has been moving near the strong end of its narrow trading range of 8.2760 to 8.2800 mainly because of strong exports, which surged 30.2 percent year on year in December.
(China Daily January 15, 2003)
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