BIZCHINA> News
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BIZCHINA> News
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Positive signals boost market
By Jin Jing (China Daily)
Updated: 2008-05-05 10:21 The mainland stock market rose 1.84 percent yesterday after the four-day labor holiday break, boosted by positive signals from the government to support the market. The benchmark Shanghai Composite Index rose 67.9 points to close at 3761.01, with 818 out of 914 stocks closing higher. The Shenzhen Component Index surged 2.64 percent, or 355.89 points, to close at 13860.78. The turnover on two bourses amounted to 211.13 billion yuan ($30.15 billion), down 3.4 percent from last Wednesday. The total capitalization rose 2 percent to 24.38 trillion yuan. China Securities Regulatory Commission (CSRC) Chairman Shang Fulin was quoted by the Economic Observer newspaper as saying he had urged institutional investors at a private meeting to help maintain market stability. Shang also said at a meeting last week that the government will stick to market-oriented supervision, properly allocate the online and offline IPO subscription amounts and encourage the listing of large blue-chip enterprises and high-growth small and medium-sized companies, according to the article. "The positive remarks showed the government's firm intention to support the market, which has eased investors' worries about a fresh nosedive," said Wu Feng, an analyst at TX Investment and Consulting Co Ltd. The recovery of Asian stocks after the US Fed cut the interest rates also lifted investor confidence that the global credit market turmoil will ease, analysts said. In Japan, Nikkei 225 jumped 2.05 percent to 14049.26. In Hong Kong, the Hang Seng Index dropped a slight 0.22 percent to close at 26183.95. Non-ferrous stocks led the rally on the mainland yesterday. Aluminum Corp of China surged 6.29 percent to close at 23.16 yuan. Jilin Jien Nickel Industry Co Ltd soared to the daily limit to close at 85.78 yuan after it reported a 17 percent net profit increase. But economists and analysts said the whole-year corporate earnings growth are not expected to be better than the previous expectation of around 30 percent. Statistics from the China Securities Journal showed the 1,500 listed companies have posted a 24.43 percent increase in net profit in the first quarter, down 3.3 percentage points from last year. Rising costs and shrinkage in investment income are the two major contributors to the slide in earnings growth, analysts said. Liang Hong, an economist at Beijing Gao Hua Securities, said in a report that government price controls have distorted profit distributions among sectors, favoring banks and non-State enterprises in the non-financial sector at the expense of State enterprises in downstream industries. "Corporate earnings may grow slower than nominal GDP growth in 2008 for the first time since 2001," said Liang. Li Bin, an analyst at China International Capital Corporation Limited, said investors must pay more attention to stocks in retail, liquor, real estate and communication sectors, which have been more resistant to the declining exports growth and rising raw material costs. (For more biz stories, please visit Industries)
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