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Most of China's shares closed higher yesterday as investors continued to build positions after a technical rebound, which had pushed indices to two-month highs and improved confidence, brokers said.
The benchmark Shanghai composite index, which groups hard currency B shares and domestic A shares, finished up 0.27 percent at 1,482.681 points. It has risen 12.28 percent this month and hit a two-month high last Thursday.
On the yuan-denominated A share markets, open to Chinese and select foreign investors, large capitalized stocks were in focus.
Baoshan Iron and Steel, the listed arm of China's top steel maker, rose 1.97 percent to 4.65 yuan (56.15 US cents) after the company said over the weekend its net profit had surged more than 50 percent in 2002.
"Market sentiment has greatly improved after the latest market rally," said a senior analyst at Shanghai Securities.
"But profit-taking pressure is mounting as markets have not seen a decent correction during the recent heavy gains. As a result, share indices will have limited potential to rise sharply again before Spring Festival."
The Shanghai and Shenzhen stock exchanges will be closed from January 30 to February 10 for the Spring Festival, or Lunar New Year, China's most important public holiday.
Analysts said the Shanghai composite index was likely to rise slightly but meet resistance at the psychologically important 1,500-point level before the holidays.
Shenzhen's B share index closed only 0.01 percent higher at 205.36 points and some profit-taking pushed Shanghai's B share index down 0.37 percent to 127.968. B shares are open to foreigners and Chinese.
Textile counter Shanghai Worldbest was Shanghai's biggest B share decliner on profit-taking, closing down 1.24 percent at US$0.556 after gaining 14 per cent this month.
On the A share markets, large-cap Pudong Development Bank fell 2.45 percent to 9.94 yuan (US$1.20), hit by profit-taking as the bank listed yesterday 300 million additional A shares which had been priced at 8.45 yuan (US$1.02).
"The listing allowed investors to take profits as Pudong Bank's new shares were sold at more than one yuan less than its current market price," said a Merchants Securities analyst.
Another market heavyweight, CITIC Securities Co, said yesterday it expected its 2002 net to have plunged more than 50 per cent due to the stocks slump and lower commission rates.
But its A shares closed up 4.12 percent at 6.82 yuan (82.36 US cents) due to bargain-hunting as the profit warning had been expected.
The latest market rebound was triggered by hopes of new government measures to support the stock markets, although officials at the China Securities Regulatory Commission have said they were not aware of imminent changes in policies.
Before the bounce, share prices had fallen more than 40 percent from their peak in June 2001 due to a series of negative factors such as poor corporate earnings, frequent A share initial public offerings and a slew of corruption scandals.
Shanghai's A index edged up 0.28 percent to 1,548.916 points yesterday and Shenzhen's rose 0.60 percent to 447.42.
(China Daily January 21, 2003)
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