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Blue chips lead market to four-week high

(China Daily)
Updated: 2009-01-20 07:58

The mainland stock market climbed 1.65 percent Monday to a four-week closing high, led by blue chips, as the government moved to bolster banking shares and optimism rose over additional State aid to struggling industries.

The Shanghai Composite Index ended at 1986.672 points, after climbing as high as 2018.51. It breached the 2000 point mark, considered a key resistance level by many analysts, for the first time since Dec 22.

Turnover in Shanghai A shares was active at 81 billion yuan, although down from 99.8 billion yuan on Friday.

Industrial and Commercial Bank of China gained 3.37 percent to 3.68 yuan, while China Construction Bank climbed 4.94 percent to 4.04 yuan.

Lou Jiwei, chairman of China's sovereign wealth fund, confirmed on Friday that Central Huijin, a domestic investment arm of the fund, had been continuing to buy shares in Construction Bank and two other top banks after starting such purchases last September.

Related readings:  Chinese shares slightly amid profit worries  Chinese shares up 2.3% at midday, led by banks  Chinese shares up 1.8% on gov't support plans  China shares open 0.45 percent higher

Datang Power climbed 4.44 percent to 7.05 yuan, after the media reported Monday that China was expected to extend as much as 10 billion yuan in financial support to the power sector.

"More industries are likely to get aid in a variety of possible ways," said Cao Xuefeng, analyst at Western Securities.

He added that sentiment was boosted generally by blue chips' strength, although many investors were tempted to lock in profits when the index approached 2000 points, due to persistent worries about the poor outlook for corporate earnings.

Some analysts also said it would be difficult for the index to breach the 2100-point mark, which has capped the upside for more than three months, before the one-week Lunar New Year holiday next week.

HSI up slightly

Hong Kong shares settled slightly firmer Monday, with the benchmark index crawling out of negative territory, where it traded for most of the day on the back of UK-based lender HSBC's weakness.

Gains were tentative and the market will seek new direction when Wall Street establishes a clearer trend after the inauguration of newly elected US President Barack Obama, analysts said.

"Our market will be seeking a new direction after all this," said Kenny Tang, head of research at Redford Securities.

The benchmark Hang Seng Index closed up 0.6 percent at 13339.99.

China Enterprises Index of mainland firms listed in Hong Kong rose 1.4 percent to 7246.15.

Agencies