By Li Zengxin (chinadaily.com.cn)
Updated: 2007-09-17 17:37

Chinese stocks were unaffected by the fifth interest rate hike this year, announced last Friday, and grew today to close at a new record high. The Shanghai Composite Index finished at 5,421.39, its first-ever close above the 5,400-point mark. The Shenzhen Component Index also finished on a record-high close.

The most recent tightening measures, the diversion of capital to overseas markets and the accelerated initial public offerings (IPOs) process couldn't rein in the crazy bull run, representing the market's affluent liquidity and capital-driven feature, said analysts.

In the short term, these pressures are expected to slow market growth or result in a price correction period. In the longer term, however, it is ultimately the liquidity situation or demand-supply for stocks and capital that decides the share prices and the direction of the whole market, they said.

Turnover of stocks in the major indices grew to 253 billion yuan, the highest in the last four trading days when the stocks recovered from a 4.5 percent plunge last Tuesday.

Shanghai Composite Index
Source: sina.com.cn

The benchmark Shanghai index opened lower at 5,309.06 and slid to a low of 5,307.77 immediately after the opening, as a response to the weekend's 27 basis-points interest hike. The index then turned upward and, soon before the close, it hit the day's highest at 5,427.17 and turned down slightly to 5,427.17, 109.21 points or 2.06 percent higher than the previous close.

Of the A shares listed in Shanghai, as many as 658 went up, while 106 closed down and 78 remained unchanged. Xinjiang Friendship Group grew 10.05 percent to 10.62 yuan on top of the gainer's list, followed by another 34 stocks reaching the maximum growth cap of 10 percent.

Inner Mongolian Baotou Steel Union was the most actively traded stock today both in terms of trading volume and transaction value. It rocketed 9.96 percent to 9.94 yuan in a wave of buying bids targeting "under-valued" stocks with particularly low price to earnings ratios.

Shenzhen Component Index
Source: sina.com.cn

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, finished at 18,494.38, also a record-high close and 280.67 points or 1.54 percent up than last Friday. Opening lower at 18,131.08, it went through the day within a range of between 18,092.15 and 18,553.89.

Of the A shares, 436 rose, 124 fell and 82 ended flat. Beijing Shougang, with the largest trading volume, went up 9.96 percent to 10.05 yuan.

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