China's shares edged up yesterday as investors looking for bargains in recently battered stocks helped the market rebound after losses earlier in the day, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, closed up 0.29 percent at 1,394.229 points.
The index fell slightly in the morning session as bank stocks, which had led the market to a mild technical rebound a day earlier, failed to rise further, brokers said.
But punters bought into stocks that have underperformed of late, with Shanghai Kaikai Industry Co Ltd's A shares rising by their 10 percent daily limit to 7.90 yuan (US$0.95).
The garment and drug firm is still down 15.78 percent from the start of 2003, underperforming a 2.69 percent rise for the broad market.
On the B-share market, Kaikai was also the top gainer in Shanghai with a 3.80 percent rise to US$0.519.
Guangming Group Furniture Co Ltd also went up its daily 10 percent limit to 5.15 yuan (US$0.62), after denying media reports it was in shareholding restructuring talks. Its A shares hit a year low of 4.60 yuan (US$0.56) in mid-September.
"Bargain-hunting spurred today's trade and lifted the market off midday lows," said analyst Wu Kan at Shanghai Securities Consulting Co Ltd.
"Investors confidence is expected to recover from lingering market weakness if the bargain-seeking keeps boosting more stocks," he said.
The market started a technical rebound on Tuesday, helped by bank shares that had underperformed the market recently.
But sentiment will remain cautious in the near term after recent market slumps, analysts said, predicting the Shanghai composite index will move narrowly below 1,420 points before the seven-day National Day holiday that starts on October 1.
"The market still lacks momentum to gain further in the short run amid a shortage of funds after a rash of stock offers," said analyst Zhang Yongpan at Guohai Securities.
Investors punished companies that planned to issue additional shares.
Beijing Capital Tourism Co Ltd plunged its 10 percent daily limit to 9.44 yuan (US$1.14) after it announced yesterday it would issue new shares.
The Shanghai B-share index climbed 0.54 percent to 99.932 points, while its Shenzhen counterpart rose 0.18 percent to 229.07.
China's yuan ended two notches firmer versus the US dollar at 8.2770, at the stronger end of its managed trading range.
Shenzhen composite sub-index rose by 0.35 percent to 3,102.99 points yesterday.
The yuan moves in a band of 8.2760 to 8.2800 enforced by the central bank.
Turnover rose slightly to US$560 million from US$530 million on Tuesday. The yuan strengthened to 7.3728 against 100 Japanese yen from 7.4015 and firmed versus the euro to 9.4677 from 9.4979.
China's central bank said yesterday it would conduct additional open market operations today to put money in the market to offset a temporary shortfall caused by a hike in bank reserves.
The central bank on Tuesday injected 10 billion yuan (US$1.2 billion) into the market in this week's open market operations, but halved the number of bills issued to mop up money supply to 20 billion yuan (US$2.4 billion).
(China Daily September 25, 2003)
