China's shares hit another new record high

Updated: 2007-08-09 19:28

SHANGHAI _ China's main index hit its fifth straight record close Thursday as banks and financial companies rose on expectations of strong profit growth.

The benchmark Shanghai Composite Index ended up 2 percent at 4754.10, breaking a record set the previous day and adding to an 8.4 percent gain over the past five sessions. The Shenzhen Composite Index for China's smaller second market rose 1.5 percent to 1348.88.

Banks and other financial stocks rose on what analysts said were expectations of strong earnings gains. Daiwa Institute of Research said it expects strong first-half bank results due to robust loan growth, higher net-interest margins and other factors.

"A widening spread between the headline inflation rate and the deposit rate is prompting investors to withdraw more funds from bank accounts to invest in stocks," said Yang Weicong, a strategist at United Securities.

Ping An Insurance (Group) Co. of China jumped 7.4 percent. Citic Securities gained 6.9 percent. Hua Xia Bank rose 5.7 percent, and China Merchants Bank advanced 5.5 percent.

The Shanghai index is up more than 60 percent this year amid a boom that saw China's economy expand by 11.9 percent last quarter.

Prices have continued to rise despite a warning by the central bank on Wednesday about inflation pressures. The warning could mean the central bank is preparing to take more measures aimed at cooling the market.

"Volatility could increase on the market in the near term after the central bank warned of rising inflation risks, which consequently triggered a speculation of imminent macro-economic controls," said analyst Zhu Haibin at Essence Securities.

Top China News  
Today's Top News  
Most Commented/Read Stories in 48 Hours