China's benchmark stock index rebounded 1.18 percent yesterday as investors snapped up shares of home-appliance makers, which brokers said would show strong interim results on a boom in consumer spending.
The Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, closed at 1,494.365 points. The index has lost 4 percent since mid-July due to several negative factors, including a rash of stock offers.
Shenzhen's sub-index gained 1.07 percent to finish at 3,362.57 points.
Shanghai's B-share index rose 0.66 percent to finish at 112.067 points while Shenzhen's B-share index climbed by 2.16 percent to 236.26.
Refrigerator and air-conditioner compressor maker Shanghai Highly's A shares were Shanghai's biggest gainer, rising their daily 10 percent limit to end at 9.66 yuan (US$1.16).
Television spare-parts maker Shenzhen SEG was the star on the Shenzhen bourse, rising 9.95 percent to 8.07 yuan (97 US cents).
China's market for home appliances, including televisions and refrigerators, has been experiencing steady growth since late last year thanks to improved consumer demand.
The boom in spending has been driven by an economy that grew 8.2 percent year on year in the first half of this year.
Analyst also attributed Monday's market gains to a technical rebound after recent losses.
Xi Weidong, an analyst at Jinxin Securities, said: "The recent fall has eased selling pressure. Market sentiment is improving, and we believe share prices should stabilize soon."
Analysts said they expected the Shanghai composite index to move narrowly between 1,450 and 1,500 points in the near term.
Index heavyweight China Southern Airlines was the most active counter, rising 0.25 percent to 4.03 yuan (48.5 US cents), defying its forecast yesterday of an interim loss, which it blamed on the outbreak of SARS (severe acute respiratory syndrome) and the Iraq War.
Zheng Weigang, a senior stock analyst at Shanghai Securities, said: "Despite its warning on interim losses, investors believe China Southern still has good prospects due to its unique position as the country's largest carrier."
Analysts said bargain-hunting also helped China Southern's rise as its A shares - trading at around 1.5 times their book value - are relatively cheap compared with those of domestic rivals such as the China Eastern Airlines Corp Ltd.
On the foreign-exchange market, China's yuan closed weaker at 8.2775 to the US dollar yesterday, still within the firmer end of its tightly managed trading range.
The yuan traded at between 8.2772 and 8.2778 throughout the session. The People's Bank of China usually enforces a trading band of 8.2760 to 8.2800.
Turnover dropped to a thin US$380 million from US$430 million on Friday.
Last Thursday, United States Treasury Secretary John Snow said he did not know whether China's yuan was undervalued but said he encouraged a wider trading band for the currency.
The US dollar's slide against the euro and other currencies has meant corresponding weakness in the yuan.
Shanghai copper futures closed a tad lower yesterday, consolidating gains made last week as the London Metal Exchange cemented its position, traders said.
The most active December 2003 contract edged down 100 yuan (US$12) to 17,890 yuan (US$2,161) a ton after adding 210 yuan (US$25.30) on Friday on an LME-driven rally.
(China Daily August 5, 2003)
