Airlines led Shanghai shares to end slightly higher yesterday,
the first trading day of the year, after the yuan rose to the
strongest since a peg to the US dollar was scrapped in 2005.
The Shanghai Composite Index, which tracks yuan-denominated A
shares and hard-currency B shares, added 0.21 percent, or 11.25
points, to close at 5,271.81.
Turnover in the Shanghai market reached 133 billion yuan
(US$18.22 billion). Gainers outnumbered losers 699 to 63, with 84
stocks unchanged.
The CSI 300 Index, which tracks yuan-denominated A shares listed
on the mainland's two exchanges, edged up 0.88 percent, or 46.83,
to 5,285.10 points.
Air China, the country's biggest carrier by market value, jumped
8.05 percent to 29.65 yuan and China Southern Airlines, the largest
by fleet size, rose 2.65 percent to 28.68 yuan.
Airlines stood to gain from the yuan's higher close against the
US dollar yesterday when it ended at 7.2934, the strongest level
since the greenback peg was scrapped. The stronger yuan can lower
the value of carriers' debts that are denominated in foreign
currencies.
The stronger yuan also benefited real estate companies, with
Shanghai-based Shimao Property Co jumping 9.85 percent to 22.52
yuan and Beijing North Star Company ending 10 percent higher at
15.58 yuan.
"Investors focused on Olympic-related stocks and small and
medium caps, which will continue to gain for a while, but over the
middle- and long-term, blue chips are still good choices," said
Sheng Xi, an analyst at Qilu Securities.
Bucking the trend, the financial sector was weak yesterday after
China's central bank reiterated its pledge to maintain a "tight"
monetary policy in 2008, and to use "balanced" measures to manage
the economy and further control liquidity, Zhou Xiaochuan, governor
of the People's Bank of China, said on December 29.
China Merchants Bank lost 2.09 percent to 38.80 yuan and
Industrial and Commercial Bank of China, the nation's largest
lender, shed 0.62 percent to 8.08 yuan.
(Shanghai Daily by Winny Wang January 3, 2008)