Shanghai index rises as PetroChina rebounds

Shanghai stock index rose more than 2 percent yesterday, boosted by a late jump in the shares of oil giant PetroChina, the most heavily weighted stock in the index.

The benchmark Shanghai Composite Index, which was marginally lower at midday, closed 2.10 percent higher at 4664.295 points, less than two points off its intra-day high.

The rise was led by a surge of buying in PetroChina during the last half-hour of trade. The firm's A shares, which hit a record intra-day low of 23.46 yuan on Friday, finished 2.87 percent higher at 24.74 yuan. They began their jump about five minutes before PetroChina's Hong Kong-listed H shares, which were 2.56 percent higher at HK$12.04 in late trade.

PetroChina is down 44 percent from its closing price on the day of its Shanghai listing in early November. If the stock is really bottoming out at last, it could provide an important boost to the overall stock market.

But traders said it remained unclear whether the stock had bottomed out. Some said institutions might have bought PetroChina and other large-caps on speculation that China could finally launch trade in stock index futures in the second quarter of this year.

Turnover in Shanghai A shares expanded further to a moderate 103.1 billion yuan from Monday's 92.3 billion yuan.

That was a positive short-term technical signal, suggesting that after rebounding in the past three days from support on its 250-day average, now at 4444, the index could head for a test of strong resistance at the November and December lows of 4778-4812.

Many analysts, however, doubt that the stock market is starting an extended rally.

BOC lifts HK shares

Hong Kong stocks rose 1.5 percent in thin trade yesterday, tracking strong Asian markets, as Bank of China surged after its chairman said it had set aside enough provisions to cover its exposure to subprime credit.

Outperforming Chinese financials and advancing resource shares backed by strong commodity prices pushed Hong Kong-listed shares in mainland companies to their highest close in two weeks.

Investors shrugged off China's report that its annual consumer price inflation surged to 7.1 percent in January, on the heels of fierce winter weather.

The benchmark Hang Seng Index closed up 363.92 points at 24123.17. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 2.5 percent, or 342.69 points, to end at 13972.94.

Agencies

(China Daily 02/20/2008 page15)