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Financials, property boost Shanghai stocks

(China Daily/Agencies)
Updated: 2008-06-25 09:18

Strong financials and property stocks led mainland shares higher yesterday, although turnover remained thin while oil refiners and steel makers sagged.

The Shanghai Composite Index ended up 1.54 percent at 2803.019 points, recouping most of the losses suffered on Monday, when it slid 2.52 percent on concern that monetary policy might be tightened further to fight inflation.

The biggest bank, Industrial and Commercial Bank of China, rose 2.16 percent to 5.2 yuan while property giant Vanke climbed 3.77 percent to 9.35 yuan - further signs that some funds were resuming buying blue chips in the belief that many valuations had fallen to reasonable levels.

As the index sank to fresh 16-month lows in the past week, several brokerages and investment banks issued reports saying valuations should support a market rally in the second half of this year.

Over the past week, the index has repeatedly tested and held on a closing basis chart support at 2723-2732 points, its late February and March 2007 lows. Some investors believe that level may be a base for a rally.

Also, there was speculation yesterday that a speech last weekend by securities regulator Shang Fulin, in which he pledged to ensure the stability of the capital markets, could be followed by concrete government action to stimulate the stock market.

Such speculation boosted brokerage shares yesterday, with CITIC Securities up 2.86 percent to 25.89 yuan, although in recent months authorities have shown little sign of taking steps for which investors have been hoping, such as the introduction of margin trade in stocks.

HSI falls in thin trade

Hong Kong shares fell for the fourth straight trading day yesterday amid thin volume, with handset maker Foxconn hitting a two-and-a-half-year low on worries over market share losses.

Foxconn, the world's top contract maker of cellphones fell 5.4 percent to HK$8.88, tracking a 6 percent drop in Motorola shares overnight.

Falls in property stocks such as Hang Lung Properties and China Overseas ahead of a US interest rate meeting also weighed on the market.

The Hang Seng Index closed down 1.14 percent, or 258.94 points, at its session low of 22456.02. Mainboard turnover eased to HK$59.17 billion from Monday's HK$59.68 billion.