China's shares closed up
yesterday, helped by a buying spree in banking stocks after the government said
it would maintain its proactive fiscal policy and deepen reforms in the
debt-ridden lending sector.
The benchmark Shanghai composite index, grouping hard-currency B shares for
foreigners and yuan-denominated A shares, finished 2.54 per cent higher at
1,432.703 points.
Top Chinese leaders, at a meeting that ended on Saturday, decided to continue
to follow a "proactive fiscal policy" next year to help expand domestic demand,
according to a weekend announcement.
"The meeting signalled China's economy would continue to grow strongly, and
investors believed that was a positive factor for the stock market," said
analyst Xi Weidong at Jinxin Securities.
The government will also select one or two major State banks to pilot
long-awaited industry reforms, and will allow Nanjing City Commercial Bank to
launch a domestic share issue possibly in 2004, the China Banking Regulatory
Commission said yesterday.
Analysts said the policies would help the development of the sector and boost
the bottom line of China's five listed banks.
Pudong Development Bank, in which Citigroup, the world's largest financial
services company, owns 4.62 per cent, closed up 3.86 per cent at 9.68 yuan
(US$1.17).
China Merchants Bank jumped 3.66 per cent to 9.9 yuan (US$1.20), Huaxia Bank
rose 2.71 per cent to 6.81 yuan (82 US cents), Shenzhen Development Bank rose
2.63 per cent to 8.6 yuan (US$1.04) and Minsheng Bank rose 2.4 per cent to 8.92
yuan (US$1.08).
The Shanghai index has risen 8.8 per cent over the past two weeks, helped by
technical buying in large-capital companies.
"About 90 per cent of stocks closed up yesterday, indicating most investors
now expect the market to rise further in the near term," said analyst Cui
Haiping at Beijing Securities.
Large-cap stocks such as top Chinese steel maker Baosteel yesterday helped
prop up the market, brokers said.
Baoshan Iron and Steel Co Ltd, the world's fourth most valuable steel maker,
was one of the day's most active counters, jumping 4.39 per cent to end at a
fresh record of 7.13 yuan (86 US cents).
Baosteel has soared 73 per cent since the start of year on strong prospects
of the company and China's steel industry.
On the foreign exchange market, China's yuan ended three notches weaker
versus the US dollar at 8.2773 but still remained at the stronger end of its
managed trading range.
Turnover, which rose to US$670 million on Friday, dropped to US$540 million
in yesterday's trading. The yuan softened to 7.5718 versus 100 Japanese yen from
7.5681 and weakened against the euro to 9.9460 from 9.8623.
Copper futures up 3%
In the futures market, Shanghai copper futures leapt to their 3-per cent
daily limit in early trade yesterday and clung there throughout the day,
supported by gains on the London Metal Exchange (LME), traders said.
Shanghai's most active June contract climbed its limit of 440 yuan (US$53) to
21,590 yuan (US$2,608) a ton, while all others gained between 440 yuan (US$53)
and 580 yuan (US$70).
Volume shrank by almost half to 72,490 lots from Friday's 137,652 lots, with
trade thinning out rapidly once contract limits had been attained.
"Although there was some trading later in the day, investors were reluctant
to sell, so prices just stayed where they were," said one Shanghai trader.
"I expect to see prices continue to rise in the short term," said another.
"They should top previous highs before we see another correction."
LME three-month copper was quoted at US$2,085/US$2,090 a ton in Asian trade
by 0400 GMT yesterday, after surging a staggering US$51 to US$2,070 in Friday's
kerb session.