SHANGHAI - China's main stock index rose above 3,000 points for the first
time on Friday and then fluctuated in a narrow range, as selling pressure on
large caps increased whenever the index climbed far above that level.
The Shanghai Composite Index had risen 0.50 percent by midday to 3,007.943
points, after hitting a record intra-day high of 3,027.742. It jumped 3.03
percent on Thursday.
Turnover was heavy at 47.1 billion yuan ($6.1 billion), up from 46.3 billion
yuan on Thursday morning. A total of 648 shares rose while 205 fell.
"After hitting the record high, people become cautious and begann to take
profits on the last trading day before the holidays," said Guo Yanling, analyst
at Shanghai Securities. The market will be closed throughout next week for
Chinese New Year.
Guo said the market's underlying mood remained bullish, supported by strong
corporate earnings as the 2006 reporting season picked up.
Many traders, however, believe the index has not broken decisively above
3,000 points, which proved strong resistance in January.
Continued profit-taking above 3,000 remains likely and an extended rally
after Chinese New Year is not inevitable, they said. Many investors may wait for
positive cues from the National People's Congress in Beijing, which meets in the
first half of March, before buying aggressively.
The index's return to the 3,000 point area refocused attention on the high
valuations of large caps, particularly financials, and these were sluggish on
Bank of China , which had jumped 4 percent on Thursday, rose only 0.2 percent
to 4.95 yuan, while oil refiner Sinopec fell 1.56 percent to 9.49 yuan.
But smaller stocks continued to draw active buying in response to news and
Baotou Steel surged 7.78 percent to an all-time high of 4.57 yuan, breaking
its previous record intra-day high of 4.34 yuan, on continued anticipation of
its parent company's eventual listing. The Shanghai Securities News carried an
analysis of the plan on Friday.
Sichuan Changhong Electric Appliance Co. climbed 2.06 percent to 5.45 yuan
after it reported a 7 percent rise in net profit last year, thanks to good
growth in sales of newly introduced product lines. Total sales rose to a record.
($1 = 7.74 yuan)