By Li Zengxin (m.ming7.cn)
Updated: 2007-08-06 16:26

Stocks in the finance, hydroelectricity, and wholesale and retail industries contributed the most to the surge. Huaxia Bank, Ping An of China Insurance and CITIC Securities led other banking, insurance and securities houses to lift the whole market. Industrial manufacturers were also strong.

Closed-end mutual funds were slightly up, with both the fund indices growing less than 1 percent. B shares finished mixed, with 43 of them closing up, 13 unchanged and 53 down. Hubei Sanonda was again the top gainer, with a nearly 10 percent growth.

With the indices breaking all-time records last Friday, the total market value also hit a new high. By the closing of August 3, all securities listed on the two stock exchanges was 20,352.5 billion yuan, while the market value of floating shares hit 6,876.3 billion yuan. The price to earnings (P/E) ratio at the Shanghai bourse was 51.63 and that at the Shenzhen market was 61.55.

The high P/E ratios, coinciding with a price to net asset ratio of 6, raised concerns of a market bubble. Xu Xiaonian, a finance professor from the China Europe International Business School said the figures are not only the highest in the history of China's stock market, but also exceed many of the highest in world history.

Xu refuted that renminbi's appreciation has largely contributed to the large-scale asset revaluation, reflected by stock price surges recently. As long as the majority of the investors pay out and receive returns both in Chinese currency, it won't lead to asset reallocation and revaluation. Only those holding foreign currencies that invest in the domestic A share market through the qualified foreign institutional investor scheme or illicit underground channels might affect stock prices with help of yuan's appreciation. Such effects are rather limited, Xu believes.

On the other hand, the high-flying performance of the domestic stock market didn't keep Chinese enterprises from listing overseas. Altogether 21 Chinese enterprises launched initial public offerings on overseas markets in the second quarter of the year, raising a total of US$11.5 billion, according to Zero2IPO Group, a Beijing-based venture capital and private equity industry service provider.

Companies in traditional industries and the service sector accounted for 61.9 percent of the newly listed stocks. There were eight companies in traditional industries and five in the service sector, raising US$5.17 billion and US$4.68 billion respectively, and accounting for 85.7 percent of the total.

The remaining nine companies were listed on the main board of the Hong Kong Stock Exchange and raised US$9.04 billion altogether, far more than those on other overseas markets. Five on the New York Stock Exchange and four on the main board of the Singapore Stock Exchange raised US$1.3 billion and US$904 million respectively. Two NASDAQ-listed companies raised US$219 million, and a Tokyo-listed firm raised only US$ 42 million.

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