BIZCHINA / Top Biz News

Blue chips rally to lead shares higher
Updated: 2006-06-16 15:17

Chinese shares rose 1.6 percent in light trade on Friday morning, boosted by blue chips, but analysts said the slim turnover showed that most investors were not confident the rally would last.

The benchmark Shanghai Composite Index climbed to 1,558.72 points, building on Thursday's mild rebound, but turnover in Shanghai A-shares was weak at just 8.84 billion yuan (US$1.1 billion).

"The movement this morning is led by blue chips like Sinopec and Merchants Bank," noted Qian Qiming at Shenyin & Wanguo Securities.

He said a downward technical correction of the market's gains earlier this year, when it rose more than 30 percent, would probably resume in the short term.

Volumes are likely to remain low until Bank of China launches its domestic initial public offer, which may be worth up to US$2.5 billion, by early next month, he said.

The Shanghai index has fallen 5 percent this month amid investor concern that an expected flood of IPOs will dilute the market.

The three IPOs now underway have locked up an estimated 300 billion yuan. CAMC Engineering Co. Ltd., the first IPO in a year on China's domestic market, will list in Shenzhen on Monday.

Bucking the trend, Sinopec Corp., Asia's top refiner, rose 4.32 percent to 5.79 yuan.

Sinopec shed nearly 8 percent in the 10 days leading up to Thursday, after it dismissed speculation it would soon take its Sinopec Shanghai Petrochemical Co. Ltd. unit private.

Top Shanghai-listed lender China Merchants Bank Co. Ltd. gained 2.16 percent to 7.09 yuan, while smaller rival Minsheng Banking Corp. rose 1.79 percent.

Traders said stocks may come off their highs in the afternoon as thin trading continued.

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