China's shares hit new record high

Updated: 2006-12-29 21:27

SHANGHAI - China's shares soared to a new record high for a fifth straight day on Friday, lifted by sharp rises in bank and airline stocks in the last trading session of 2006.

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The Shanghai Composite Index rose 4.2 percent to close at 2,675.47, more than double its level at the start of the year. The Shenzhen Composite Index for China's smaller second market rose 2.1 percent to 550.59.

Bank and airline stocks were buoyed by a rise in China's yuan currency against the US dollar, which makes bank assets more valuable and reduces dollar-denominated debt burdens for Chinese airlines.

Air China and China Southern Airlines rose by the daily limit of 10 percent, while Shanghai Airlines rose 8.5 percent.

Bank of China surged 9.9 percent and Industrial & Commercial Bank of China advanced 6 percent. BOC has risen 36 percent and ICBC 31 percent this week.

Analysts say the rise in bank stocks has been driven by expectations that the impending initial public offering by life insurer China Life will set a high share price, making other financial stocks look attractively priced.

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