China equities rebound almost 6% on regulator comment

(Xinhua)
Updated: 2008-08-20 15:01

BEIJING - Chinese shares surged about 6 percent in the morning session Wednesday, snapping a prolonged losing trend, as investors reacted to a Tuesday night statement by insurance regulators expressing support for the market.

The benchmark Shanghai Composite Index rebounded 5.89 percent, or 138.17 points, to 2,482.64. The Shenzhen Component Index closed out the morning at 8,460.12 points, up 496.55 points, or 6.24 percent.

Aggregate turnover hit 44.1 billion yuan (US$6.4 billion), a big rise from Tuesday's full-day total of 30.5 billion yuan. Gains outnumbered losses by 1,401-1 on the two bourses as of 11:30 a.m.

The only loser was ST Changhe Automobile, which lost 1.01 percent to close at 6.88 yuan in the morning session, after reporting unexpectedly low first-half profits.

Shares opened lower following an overnight decline on Wall Street. The Shanghai index opened at 2,332.48 points, down 0.51 percent, while the Shenzhen index dropped 0.57 percent at the opening to 7,918.57 points.

However, both bourses saw a broad-based rebound at about 10:00 a.m., driven up by financial issues -- banks, securities, and insurance shares.

Analysts attributed the gains to a turnaround in investor confidence.

According to analysts, investors took heart from a supportive statement by the China Insurance Regulatory Commission, which said several hours after the market close on Tuesday that it would always firmly support the development of the country's share market. However, it didn't elaborate on how it would do so.

There was also market talk that the government would allow brokers to underwrite secondary offering of shares that have been "locked-up," although again, no details were available. However, such issues would be a boost to securities firms.

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