Top Biz News

Bank stocks lift Shanghai index to 16-month high

By Zhang Ran (China Daily)
Updated: 2006-04-04 05:44

China's stocks rose to a 16-month-high yesterday, buoyed by an all-around rebound in banking, energy, property and retail sectors.

The benchmark Shanghai composite index finished at 1,319.471 points, its highest level since December 9, 2004, when it closed at 1,338.800 points.

The index has jumped 20 per cent since December 1, 2005, supported by strong technical buying after a five-year market slump.

Banking stocks turned in a good performance with both foreign and domestic investors showing rising confidence; and experts listed several factors that drove up the shares.

"Because Hong Kong-listed China Construction Bank and Bank of Communications are actively traded overseas, they in turn influenced the domestic bank shares' rise," said She Minhua, an analyst with CITIC China Securities.

Meanwhile, investors are shifting focus from industries such as steel and cement which are seen entering a low-growth period to the banking sector.

Shanghai-listed China Merchants Bank Co (CMB) closed 4.04 per cent higher at 6.69 yuan (82 US cents), to become yesterday's most active stock.

China's first private bank, Minsheng Banking Corp, was the second-most actively traded, ending 4.71 per cent up at 5.56 yuan (68.6 US cents).

Li Yinquan, vice-president of China Merchants Group and leader of CMB's share reform team, told China Daily that the bank would probably float shares on the Hong Kong Stock Exchange within the year.

"I believe the index will remain over 1,300 and continue to climb up," She said.

The index has been Asia's worst performer over the past two years. China started the reform of non-tradable shares in April 2005 and the securities regulators recently announced several market-friendly measures including allowing more institutional investors into the market.

(China Daily 04/04/2006 page1)