Interest in bank issues pulls up indices slightly
( 2003-09-19 09:10) (China Daily)
China's shares closed up slightly yesterday, helped by rises in banking stocks, but weak market sentiment after a two-month slide was likely to contain any further gains, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, finished 0.05 per cent higher at 1,390.485 points, after having hit its lowest close since January 13 a day earlier.
"There was some technical buying in bank stocks, but follow-through buying in the broader market was limited," said analyst Di Xing at Huatai Securities.
"Investors are unable to see opportunities to make money due to recent market weakness, so most are likely to stay on the sidelines in the near term."
China Merchants Bank Co Ltd's A shares outperformed the market, ending up 1.07 per cent at 9.46 yuan (US$1.14), rebounding from an 11 per cent fall over the past four weeks sparked by a plan to issue US$1.2 billion in convertible bonds.
Huaxia Bank Co Ltd, which debuted only last week as China's fifth bank to list, rose 1.11 per cent to 7.27 yuan (US$0.88) as a heavy 49.34 million shares changed hands, making it the most active stock of the day.
The Shanghai composite index has fallen 9.6 per cent since mid-July, hit by a slew of negative factors including too many stock offers and a government tightening of bank lending.
Analysts said they believed yesterday's rebound would fizzle out soon, and the index could fall another 6 per cent to test a year-low of 1,311.684 points set on January 6.
"Many investors, including mutual funds, do not expect a market recovery in the near term due to factors such as a continued official tightening of bank lending," said Zheng Weigang, a senior analyst at Shanghai Securities.
"So the Shanghai composite index is still likely to head for the year's low despite today's minor rebound."
WholeWise Sci&Tech Co Ltd bucked the market's gains yesterday to become the biggest faller, plunging its 10 per cent daily limit for a second day to close at 9.32 yuan (US$1.13).
The software maker embarked on a steep downtrend on Wednesday when it announced it was being investigated by securities regulators for rule violations.
In the futures market, Shanghai copper futures ended slightly down yesterday, ignoring gains on the London Metal Exchange as Chinese investors cautiously waited to see if the LME would soon fall, traders said.
Shanghai's most active February contract ended 30 yuan (US$3.60) lower at 18,370 yuan (US$2,219) a ton, while most others dipped 10 yuan (US$1.20) to 60 yuan (US$7.20).
Combined volume fell to 54,608 lots from an active 80,254 lots on Wednesday.
"Most investors believe the London market is still fluctuating and looking vulnerable to losses, so today's market sentiment was quite cautious," said a Shanghai trader yesterday.
LME three-month copper rose US$13 to US$1,802 at Wednesday's close, although the market was somewhat sluggish after early Far Eastern buying ran its course, traders said.
Spot copper in Shanghai ended down 70 yuan (US$8.50) to 80 yuan (US$9.70) to trade in a range of 18,400 yuan to 18,460 yuan (US$2,222-2,229) yesterday.
Almost all Shanghai aluminium futures closed down 30 yuan (US$3.6) yesterday. Combined volume was thin at 4,290 lots, down from Wednesday's 5,618 lots.
LME aluminium finished unchanged at US$1,409, having spent most of the session slightly higher.
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