Concern over tightening policy limits share gains

Updated: 2008-01-02 17:24

Chinese share prices closed slightly higher on the first trading day of 2008 amid concern about tightening policies.

The benchmark Shanghai Composite Index, which covers both A and B shares, was up 11.25 points or 0.21 percent, to close at 5,272.8 points.

The Shenzhen Component Index on the smaller market climbed 155.53 points, or 0.88 percent, to stand at 17,856 points.

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Analysts from Huiyang Investment said investors were cautious about the possible negative impact of macroeconomic and financial policies. Central bank governor Zhou Xiaochuan reiterated in his New Year speech that monetary policy will be tighter and will also play a bigger role in macroeconomic control.

Nonetheless, stocks related to the Olympics, as well as Beijing-based and consumption-related stocks, fared well and mostly recorded gains of up to the 10 percent daily limit.

China Quanjude, a roast duck restaurant founded more than 140 years ago that now has a chain of stores, rose 9.99 percent to close at 64.93 yuan ($8.89) per share.

Yanjing Beer, based in Beijing, rose 10.02 percent to 23.16 yuan, and Beixin Building Materials, also based in the capital, rose 10.03 percent to 13.6 yuan.

Traders at Lianhe Securities said they believed that the sharp gains by Olympics-related and Beijing-based stocks implied investors' strong confidence about the 2008 event in Beijing.

However, heavyweight stocks weighed on the indices.

Energy and metal companies slumped. PetroChina, the largest stock on the Chinese market, dropped 1.23 percent to 30.58 yuan. China Shenhua and China Aluminum slid 2.55 percent and 2.26 percent, respectively, which put them among the top 10 declines by A-shares in Shanghai.

Banking stocks were also weak. The Industrial and Commercial Bank of China, the largest bank in China, dropped 0.62 percent to 8.08 yuan.

Combined turnover amounted to 201.38 billion yuan, up from 190 billion yuan for the final trading day of 2007.

Gains outnumbered losses by 741 to 72 in Shanghai and by 595 to 52 in Shenzhen.
"Investors should sell stocks that saw robust rises over the past few weeks at a considerably high price," an analyst with Huiyang Investment suggested.

The Hushen 300 Index, which accounts for 60 percent of the nation's stock market value, rose 46.83 points, or 0.88 percent, to 5,385.1.
(For more biz stories, please visit Industry Updates)