Investors talk at a securities brokerage firm in Shanghai
April 27, 2007. [newsphoto]
China's main stock index rose to a fresh all-time high on Monday, with
sentiment buoyed by two spectacular listings, despite a hike in bank reserve
ratios announced at the weekend.
The benchmark Shanghai Composite Index gained
2.17 percent to close at 3,841.27 points, the first close above
3,800. Turnover in Shanghai A shares was heavy at 188.73 billion yuan (US$24.446 billion).
The central bank's announcement on Sunday that it would raise reserve ratios
by 0.5 percentage point was taken as mildly positive, implying it saw no need to
hike benchmark interest rates -- a harsher monetary tightening step -- in the
Many investors had feared a rate hike over the holiday. "The reserve ratio
rise won't hurt the market a lot. The index is still in an uptrend," said
Haitong Securities analyst Zhang Qi, although he added that risks remained high
with the market up more than 40 percent so far this year.
Every one of eight local fund managers, brokers and analysts informally
surveyed by Reuters last week predicted the index would exceed 4,000 points in
about a month, boosted by huge sums of money entering the market from newly
created mutual funds.
Two big listings on Monday showed the strength of investor sentiment.
Aluminum Corp. of China (Chalco) tripled from its offer price to end the morning
at 19.16 yuan, far above many analysts' expectations of 10-15 yuan. Weichai
Power Co. soared 222 percent to 65.95 yuan.
Chalco's leap created a massive 111 percent premium for its A shares above
its Hong Kong-listed H shares , which ended the morning slightly lower at
This is one of the biggest A-share premiums for a top Chinese stock, and for
some analysts it is another sign that the A-share market has overheated.
Securities industry-related stocks soared on the view that brokerages would
benefit from a continuation of the market's bull run in the absence of an
interest rate hike. CITIC Securities soared 9.98 percent to 59.06 yuan.
Retailing giant Bailian climbed 9.11 percent to 21.44 yuan after saying
first-quarter net profit rose 44 percent.
One big loser was CITIC Bank , which had soared 96
percent in a much stronger-than-expected Shanghai listing on Friday. The stock
tumbled 9.06 percent to 10.34 yuan as speculators took profits.