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China's shares rose yesterday as investors hoping for government policies to support the stock markets sought bargains in large caps such as China United Telecommunications Corp, brokers said.
The benchmark Shanghai composite index climbed up 17.91 points to 1,510.67. Shenzhen's shares gained 31.71 to 3,063.02.
Shanghai's hard currency B share index closed up 0.83 percent at 126.213 points while Shenzhen's was up 1.59 percent at 210.66. B shares are open to foreigners and Chinese.
"Renewed hopes of market-boosting measures by the government triggered late buying today," said China Securities analyst Hu Zhiguang. "Investor sentiment has also improved due to a market rally this year."
Share prices have risen generally since the start of the year as investors bet the government would support the markets, brokers said.
Yuan-denominated A shares in China Unicom, the second largest company by market capitalization in China, were the day's most actively traded and closed up 0.63 percent at 3.18 yuan (US$0.39).
Oil giant Sinopec Corp, China's largest capitalized company, rose 0.86 percent to 3.51 yuan (US$0.42).
Until the latest rally, the composite index had fallen more than 40 percent due to a slew of negative factors including poor corporate earnings and frequent initial public offerings.
The Shanghai's composite index ended yesterday up 1.2 percent, breaking through the psychologically important 1,500 level.
"The breakthrough will help investors recover confidence in the markets," Huatai Securities analyst Wu Xiaochun said. "The markets are likely to record more gains in the near term."
But his view was not shared by other analysts.
"The potential for share indices to rise further is very limited as the composite index has reached profit-taking levels and will see growing pressure for a correction," said analyst Zhang Yongpan at Guohai Securities.
On the foreign exchange market in Shanghai, China's yuan closed two notches lower against the US dollar at 8.2777 in thin trade as banks bought more hard currency on behalf of importers, dealers said.
The yuan moved in a tight band between an intraday low of 8.2777 and a high of 8.2773. Turnover fell to just US$200 million from Tuesday's US$250 million.
"Trade was quiet today as the market was still in a holiday mood," a domestic bank dealer said, adding most deals were seen at 8.2775 as China was still getting back to work after a week's Spring Festival holidays.
On Saturday, the Shanghai-based China Foreign Exchange Trade System extended trading hours from 9.30 am to 15.30 pm daily without a midday break. Formerly, trade was carried out from 9.20 am to 11.00 am.
Dealers said the extension would help activate trade in the long term, although it had little immediate impact because of the holiday.
They said the yuan was likely to hover at the firm end of its government-set trading box of between 8.2760 and 8.2800 in the near term, buoyed by China's healthy trade surplus.
The currency's movements within that trading box are decided basically by China's trade performance because the yuan is not fully convertible on the capital account.
Exports rose 22.3 percent year on year to US$325.57 billion in 2002, yielding a strong trade surplus of US$30.35 billion.
Most Chinese trade firms are required to sell hard currency earnings to commercial banks designated to trade on the market.
The yuan eased against the Japanese yen to 6.8574 versus 100 yen from 6.8262 on Tuesday. It also weakened to 8.8946 against the euro from 8.8804.
The yuan firmed against the Hong Kong dollar to close at 1.0609 from 1.0615.
(China Daily February 13, 2003)
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