Strong performances among banks powered Shanghai's key stock index higher in the morning session today on expectations a stronger yuan will spur demand for assets in the currency.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, added 0.26 percent, or 14.16 points, to 5,470.70 at 11:30am today.

 

Losers in the Shanghai market outnumbered gainers 561 to 224 and 64 were unchanged.

 

But the Shenzhen Composite Index, which covers the smaller mainland stock market, was down 0.46 percent, or 7.2 points, to 1,549.07.

 

Minsheng Banking, the nation's only privately-controlled listed lender, rose 3.68 percent, or 0.57 yuan (7 US cents), to 16.08 yuan. China Merchants Bank Co, the nation's biggest dual-currency credit-card issuer, climbed 4.14 percent, or 1.70 yuan, to 42.80 yuan.

 

Bank of Beijing Co, China's biggest city bank, increased 0.96 percent, or 0.21 yuan, to finish the morning session at 22.17 yuan. The lender said net income last year probably rose more than 50 percent from a year earlier. Net income was 2.1 billion yuan in 2006.

 

China Vanke, the nation's biggest listed property developer, gained 2.16 percent, or 0.66 yuan, to 31.21 yuan.

 

The yuan rose as much as 0.12 percent to 7.2630 against the US dollar in Shanghai today, the strongest since it ended a link with the US currency in July 2005.

 

Airlines also recovered this morning from two turbulent trading days.

 

Air China, the world's biggest airline by market value, jumped 2.89 percent, or 0.81 yuan, to close the session at 28.83 yuan. China Eastern, the country's third largest by fleet size, also gained 3.21 percent, or 0.63 yuan, to 20.63 yuan.

 

Airlines have performed poorly since shareholders of China Eastern vetoed a proposal offered by Singapore Airlines Ltd on Tuesday.

 

Shareholders of Shanghai-based China Eastern Airlines vetoed Singapore Airlines Ltd's bid for a 24 percent stake in the carrier for HK$7.16 billion (US$918 million) on Tuesday. The rejection clears the way for Air China Ltd's parent to make a higher offer.

 

China National Aviation, Air China Ltd's parent, holder of about 10 percent of China Eastern, said on January 6 that it would make a counter-bid of at least HK$5 per share if the Singapore deal is rejected. China Eastern planned to sell new shares to its parent and the Singaporean investors at HK$3.80 apiece.

 

Elsewhere, gold producers rose slightly this morning.

 

Zhongjin Gold Corp, China's largest publicly traded gold miner by market value, edged up 0.23 percent, or 0.31 yuan, to 133.10 yuan. Shandong Gold Mining Co, the second-largest, inched up 0.46 percent, or 1 yuan, to 218 yuan.

 

Gold futures rose 1.3 percent to US$893.60 an ounce in New York yesterday. The price earlier reached US$897.30, the highest ever for an active contract.

 

(Shanghai Daily January 11, 2008)