China stocks rebound on electricity shares buy

(Xinhua)
Updated: 2008-09-12 20:04

BEIJING - Chinese shares gained back 0.03 percent on Friday led by power companies on talk of an electricity price rise.

China Electricity Regulatory Commission (CERC) official Zou Yiqiao said at a press conference here on Thursday power prices may soon rise as inflation pressure eased.

The benchmark Shanghai Composite Index ended 0.03 percent higher to 2079.67 points after falling to a 22-month low on Thursday. The Shenzhen Component Index edged up 0.86 percent to 6935.07 points.

Sichuan Xichang Electric surged 9.88 percent to 3.78 yuan (55 US cents), while Huadian Power and China Huaneng Group jumped 1.42 percent and 1.08 percent respectively.

Analysts, however, believed the rebound would be short lived as the lowest August industrial output in 18 months of 12.8 percent, which was released on Friday, was widely read as a sign of an economic slowdown.

Against the backdrop of a slowing economy, it was impossible to see persistent rises. Continuous drops were likely to prevail over a long unspecified period of time, said a Shenyin Wanguo Securities analyst.

Sinopec, the biggest oil refiner by volume in Asia, shot up 3.1 percent to 8.97 yuan after heavy selling the previous trading day. PetroChina, the most heavily-weighted A share stock, was unchanged at 10.71 yuan.

Financial shares were sold across the board. Citic Securities, China's leading brokerage, dropped 2.17 percent to 18.97 yuan. The Industrial and Commercial Bank of China shed 1.86 percent to 4.22 yuan.

Investor sentiment was extremely low as the key Shanghai index had plummeted 66 percent from its record high of 6,124 points on October 16.

Central bank governor Zhou Xiaochuan reiterated China would not relax the fight against inflation in fear of a possible rebound, after the August inflation rate hit a 14-month low of 4.9 percent.

Investors also worried the gap between consumer price inflation and producer price inflation would threaten to erode the profit margin of many industrial companies.

Beijing Oriental Yuhong Waterproof Technology fell below its initial public offering (IPO) price on its third trading day to close at 17 yuan. It rose 17 percent on its Wednesday debut from its IPO price of 17.35 yuan to 20.30 yuan, below analysts's expectations of 21 to 25 yuan.

In Friday trading gainers outnumbered losers by 427-399 in Shanghai and 424-269 in Shenzhen.