(chinadaily.com.cn)
Updated: 2008-03-19 17:32

Chinese stocks rebounded moderately Wednesday after five straight days of losses as investors seemed to be unfazed by the central bank's move to raise reserve requirements for commercial banks and heightened by a drastic US interest rate cut.

Investors look at an electronic board showing stock information at a brokerage house in Chongqing, Southwest China March 19, 2008. The benchmark Shanghai Composite Index closed at 3,761.60 on Wednesday, up 92.71 points over the previous close. The 2.53-percent rise marked the biggest one-day point gain in one-and-a-half months.[Xinhua]

The benchmark Shanghai Composite Index closed at 3,761.60 on Wednesday, up 92.71 points over the previous close. The 2.53-percent rise marked the biggest one-day point gain in one-and-a-half months.

Stocks managed to regain the 3,700 mark after plunging nearly 4 percent the previous day due to fears of imminent interest rate hikes and a possible economic slowdown as a result of the impact from the US economy.

The smaller Shenzhen Component Index concluded the daily trading at 13,044.20 with a gain of 555.18 points, or 4.45 percent, from the previous trading day.

China's central bank, the People's Bank of China, announced Tuesday to raise the deposit reserve requirement ratio of commercial banks to a record high of 15.5 percent, the second such move this year. But the half-point increase is less than anticipated by the market, thus partly boosting investors' confidence.

Coincidently, the US Federal Reserve slashed a key interest rate by three-quarters of a point Tuesday, capping its most aggressive two months of action in 25 years in the country's battle to halt a spreading credit crisis. Wall Street welcomed it by bursting into its biggest gain in five years.

News that the Chinese government may reduce the stamp tax in the near term also lifted investors' sentiment.

However, there are lingering worries about remarks made by Zhou Xiaochuan, who was renamed the central bank governor on Monday by Premier Wen Jiabao. During the weekend he said there is still room for further rises in interest rates, and so rebounds in Chinese stocks were limited and the future of the market is still uncertain. The central bank has ordered six increases in interest rates since the start of 2007.

Real estate stocks led the rally in Wednesday's market that saw over 500 stocks post more than five-percent gains and less than 130 stocks drop. Vanke, one of China's major realty developers, increased by 9.56 percent, followed by an 8.58-percent jump of Poly Real Estate.

Large-cap stocks fared moderately, restricting the market from skyrocketing.