Stocks edge down, hit by profit-taking

Shanghai shares fell for the first time in four days yesterday as most stocks were hit by profit-taking, but banks rose on the back of better-than-expected earnings at Merchants Bank.

The Shanghai Composite Index hit an intra-day high of 5480.07 points but ended 0.13 percent lower at 5386.531.

Turnover in Shanghai A shares expanded to a heavy 183.7 billion yuan, its highest level since the index was hitting its record intra-day peak of 6124 points in mid-October, from Monday's 161.4 billion yuan.

Merchants Bank jumped 3.17 percent to a one-month high of 40.31 yuan, though it came well off its intra-day high of 41.22 yuan.

Financial shares in general outperformed with Industrial and Commercial Bank of China up 1.51 percent to 8.09 yuan. China Life Insurance climbed 3.99 percent to 58.13 yuan.

"The market has become active again as good news keeps coming, while further economic tightening measures are not yet in sight," said Li Xianming, strategist at Ping An Securities.

A double bottom formed by the November and December lows and triggered late last month points the index above 5600 points in coming days or weeks. Many traders see strong resistance near 6000 points, where the index peaked at the start of November.

Major chart support is at the early December high of 5209.

Among other blue chips, oil giant Sinopec jumped 2.63 percent to 24.22 yuan, possibly because of optimism about the government subsidy which it is soon expected to receive from the government in compensation for last year's refining losses.

Property shares, which had rebounded sharply on Monday, fell back. Gemdale, a Shenzhen-based developer, slid 4.25 percent to 44.58 yuan.

Banking boost

Hong Kong-listed China shares rose 0.4 percent yesterday after a strong earnings forecast by China Merchants Bank lifted the Chinese banking sector.

But the main blue chip index finished lower as investors cashed in shares in Hong Kong property developers a day after they ramped up on expectations of further US interest rate cuts.

The benchmark Hang Seng Index ended down 0.25 percent at 27112.90, despite a strong open.

The China Enterprises Index of H shares, or Hong Kong-listed shares in mainland companies, gained 0.4 percent to 15659.71.

Mainboard turnover was HK$114.9 billion compared to Monday's HK$113.5 billion.

Agencies

(China Daily 01/09/2008 page15)