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China's shares staged a minor rebound yesterday as investors bought steel stocks, but firms linked to Chinese property tycoon Zhou Zhengyi either fell or were halted from trade, brokers said.
The Shanghai exchange suspended trading of shares in companies run by Zhou, including stationery maker Daying Modern Agricultural Co and property developer Shanghai Albatronics.
It demanded the two companies make statements on newspaper reports of alleged improprieties after their stocks had slumped over the last few days.
Zhou was under house arrest in Shanghai over suspected irregular dealings at his flagship firm, Nongkai Development (Group) Co, an official newspaper said.
The benchmark Shanghai composite index, grouping yuan-denominated A shares and hard currency B shares, closed up 0.76 percent at 1,574.111 points after falling this week, dragged down partly by declines in companies related to Zhou.
Shanghai's B-share index rose 0.11 percent to 117.604 points, but Shenzhen's slipped 0.30 percent to 223.65.
A shares in machinery maker Xugong Science and Technology, in which Zhou owns an indirect stake, fell the 10 percent daily limit for the second straight day to 13.55 yuan (US$1.64).
"A rise in steel stocks helped the broader market reverse a downtrend over the past few days," said analyst Chen Huiqing at Huatai Securities.
Maanshan Iron and Steel's A shares, the day's biggest gainer, rose by the 10 percent limit to 4.29 yuan (US$0.52), while market heavyweight Baoshan Iron and Steel was up 3.18 percent at 5.51 yuan (US$0.67).
Booming domestic industries such as steel, autos and banking have helped such stocks outperform the markets by far this year.
Index heavyweight Shanghai Automotive Co's A shares ended up 0.82 percent at 12.29 yuan (US$1.49) yesterday and have nearly doubled this year.
Analyst Yang Weidgong at MF Securities said he expected share indices to rise moderately over the near term.
Shanghai's A-share index finished 0.77 percent higher at 1,648.426 points while its Shenzhen counterpart inched up 0.13 percent to 460.63.
China's yuan closed a notch softer against the US dollar at 8.2771 yesterday, but remained strong within its government-set trading range, dealers said.
The yuan was sandwiched in a tight three-tick band with an intraday high of 8.2769 and the day's low at 8.2771, near the firm end of the tiny 8.2760 to 8.2800 range which the central People's Bank of China enforces.
Turnover was a thin US$360 million, the same as Tuesday's.
"Light dollar buying from importers pushed the yuan a bit lower today, but an ample hard currency supply on the market kept the yuan at firm levels," said a bank dealer in Beijing, adding most deals were seen at 8.2769.
China has had trade surpluses for several years and reported a slim trade surplus of US$100 million in the first four months of this year.
A Reuters poll of 10 economists showed most did not expect a change in the yuan's range this year.
While adjustments of its peg to the dollar are possible, economists on average expect the currency to remain pegged at some level for a further six years.
The yuan firmed slightly yesterday to 6.9719 per 100 Japanese yen from 6.9746 on Tuesday and also strengthened against the euro to 9.7031 from 9.7057. It closed unchanged against the Hong Kong dollar at 1.0612.
(China Daily June 5, 2003)
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