China stocks rise; yuan gains

Updated: 2007-05-17 21:03

SHANGHAI - Chinese stocks rose Thursday, buoyed by retail investor purchases of foreign-currency "B shares" and gains for the brokerage sector. The yuan gained against the US dollar.

The benchmark Shanghai Composite Index, which tracks both Chinese-currency "A shares" and B shares, gained 1.6 percent to 4,048.29, just below its record close of 4,049.70 a week earlier.

The Shenzhen Composite Index rose 2.5 percent to 1,151.85.

Retail investors recently have piled into the B share market, where valuations remain lower than in the A share market. The two classes of shares are traded separately in Shanghai and Shenzhen.

The Shanghai B Share Index surged 8 percent Thursday to 357.14 on top of Wednesday's 6.4 percent gain. Shenzhen B shares rose 2.8 percent to 767.72.

Companies linked to domestic brokerages also soared on hopes heavy stock trading will boost their income.

Guangxi Hechi Chemical jumped by the daily 10 percent limit to 11.28 yuan; Guangxi Guidong Electric Power also rose 10 percent, to 30.75 yuan, as did Liuzhou Liangmianzhen, which closed at 47.27 yuan.

Despite the gains, concerns regulators might move to cool stock prices, were weighing on sentiment, analysts said.

"Institutional investors, such as insurance companies, seem to be wary (of tightening measures) and are trimming holdings," said Zhou Lin, an analyst at Huatai Securities.

In currency dealings, the dollar was at 7.6758 around 0730 GMT on the over-the-counter market, down from Wednesday's close of 7.6820.

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