By Zhang Lifeng (China Daily)
Updated: 2007-01-23 10:01

Chinese shares soared to a record high yesterday, pushed by positive government policy pledges and a massive inflow of capital.

The benchmark Shanghai Composite Index surged 3.57 percent to close at 2933.19 points.

Only 16 stocks fell in price while nearly 100 stocks surged to their daily limit yesterday on the Shanghai Stock Exchange.

Turnover on the Shanghai market hit 101.9 billion yuan (US13.1 billion), surpassing the previous record of 88.5 billion yuan set last Friday.

"The heavy trading is an indication that there is no shortage of funds there, which is the main reason behind the strong rally," said Guo Yaoqiang, an analyst with Hai Tong Securities.

"The sentiment is likely to remain bullish in the near term unless there's a major policy U-turn or other abrupt factors," Guo said.

The National Financial Work Conference, a meeting held every five years that ended on Sunday, said it would continue developing the country's capital markets.

"The conference's tone was generally positive although it did not spell out any detailed policy moves," said Sun Liang, an analyst with Guotai Jun'an Securities.

"The favorable policy statements and strong liquidity is likely to push the stock index even higher in the near term," Sun said.

Bank stocks posted gains yesterday, encouraged by the financial conference.

The Industrial and Commercial Bank of China, the nation's biggest lender, climbed 3.2 percent to close at 5.48 yuan, while Bank of China, the largest foreign exchange bank, soared 3.51 percent to close at 5.02 yuan.

China Life Insurance, whose stocks will be included in the market indexes from today, climbed 5.14 percent to close at 46.86 yuan.

Technology, transportation and retail stocks also advanced yesterday.

Founder Technology Group Co surged to the daily limit to close at 5.84 yuan, boosted by its strong sales data.

Bus and taxi firm Beijing Bashi soared to the daily limit to reach 9.96 yuan and Daqin Railway jumped 10 percent to 10.07 yuan.

Beijing Wangfujing Department Store also jumped 10 percent to 30.35 yuan, based on expectations of strong sales during the upcoming Chinese New Year, according to analysts.

The bullish market has attracted a growing number of new investors.

The number of newly opened stock accounts this year has topped 120,000, according to figures from the China Securities Depository and Clearing Corporation Ltd.