Shanghai stock index on the rebound

The Shanghai main stock index tumbled more than 4 percent to a fresh 13-month low yesterday before bouncing sharply to end higher, led by financials.

Most stocks actually closed lower, and turnover remained thin. Analysts said it was not clear that the market was starting any extended recovery from a six-month slide.

"I think it's just a technical rebound as the index broke the 3,000 point level," said Chen Jijun, analyst at CITIC Securities.

"Unless we see clear signs of better-than-expected corporate profit growth, it will not last."

The Shanghai Composite Index sank to a low of 2,990.788 points at mid-afternoon but closed 0.99 percent higher at 3147.793, leaving it down 49 percent from last October's record peak.

The biggest bank, the Industrial and Commercial Bank of China, closed 2.5 percent higher at 6.14 yuan.

Wuhan Iron and Steel, the listed arm of China's fifth largest steel maker, jumped 9.01 percent to 13.07 yuan after reporting first-quarter net profit surged 43 percent.

Some traders and fund managers consider 3,000 points a major support area for the index - the 61.8 percent retracement of its bull run from mid-2005 lies at 2956 points. So the market's bounce yesterday prompted speculation that stocks might finally be bottoming out.

"The economy is not as bad as most think," said Huang Yan, fund manager at Guotai Fund Management. "Many stocks are already very cheap and worth investing in, such as Vanke."

He noted that property stocks rebounded sharply yesterday after sliding over the past week. Vanke, the biggest listed developer, jumped 4.4 percent to 20.15 yuan.

Turnover in Shanghai A shares shrank to 58.6 billion yuan from Monday's 79.2 billion yuan.

Hang Seng recoup losses

Hong Kong stocks erased morning losses to end up nearly 1 percent at an 11-month closing high yesterday, with oil companies and other Chinese stocks leading the rally after Shanghai shares rebounded in late trade.

The benchmark Hang Seng Index rose 217.48 points to close at 24939.15 after losing more than 1 percent at the opening.

The China Enterprises Index of Hong Kong-listed mainland companies, or H shares, jumped 3.1 percent to end at 13420.22, fuelled by a 6.5 percent jump in PetroChina and a 5.1 percent gain in Sinopec.

Mainboard turnover rose to HK$87.74 billion from HK$81.29 billion on Monday.

Agencies

(China Daily 04/23/2008 page15)