 Stock market shines as most global peers lag
By Bi Xiaoning (China Daily)
Updated: 2009-04-03 07:56
The Chinese stock market continued its bullish streak yesterday, pushing the benchmark index to a seven-month high. The rally was propelled largely by financial services, coal and steel sector shares. The Shanghai Composite Index rose 17.27 points, or 0.7 percent, to close at 2425.29, the highest since Aug 21. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, gained 1.1 percent to 2576.40. Since the beginning of 2009, the Shanghai Composite Index has rallied a total of 33 percent despite occasional faltering, catapulting the Chinese stock market to second place after Peru among the best performing stock markets in the world. Economists and analysts said the rally was largely fuelled by investors' growing confidence about the country's economic prospects as the government's 4-trillion-yuan stimulus package is beginning to yield results. China is the only country worldwide where stock investors are more optimistic than on Sept 15, the day Lehman Brothers Holdings Inc's bankruptcy filing shattered confidence in the global financial system, according to a survey by financial news provider Bloomberg. A slew of economic indicators released in the past couple of months were widely taken as signs that the economy is bottoming out. "We are probably now at a turning point of the economic recovery," said Chen Wenzhao, strategist, China Merchants Securities Co, Shanghai. The optimism has also been translated into more bullish expectations of improved corporate earnings. "The first-quarter earnings won't be good, but we'll see a quarter-on-quarter increase in corporate earnings in the second and third quarter," Chen said. The financial sector has been at the forefront of the Chinese stock market rally. In yesterday's trading, China Construction Bank Corp, the nation's second largest bank, added 1.62 percent to 4.39 yuan. Ping An Insurance (Group) Co, China Merchants Bank Co and many other financial services companies jumped over 1 percent. Brokerage CITIC Securities Co said it expects a rebound in second-quarter earnings and said it was the right time to buy shares of financial services companies. Datong Coal Industrial Corp and steel company Dalian Jinniu Co both jumped nearly 10 percent. "The two major supports for the market now, the economic recovery and liquidity, are still intact, so there are still reasons for the market to be on the upside" said Zhao Zifeng, fund manager, China International Fund Management Co, Shanghai. China stocks may extend their rally in the next two months, as the economic recovery is helping to improve the corporate earnings potential, according to a CITIC report. The report said the market would be driven in the second quarter by liquidity and corporate earnings. "Second-quarter corporate profits may be bolstered by the acceleration in government investments and pick-up in exports," said Yu Jun, analyst, CITIC Securities. Jing Ulrich, chairwoman of China Equities at JPMorgan, also said in a recent report that "the recent out-performance and rising average trading volumes in the Chinese share market suggests that investor confidence is returning." Fundamentally, economic indicators also show that China's proactive monetary and fiscal policies have started to yield some results - investment levels have accelerated, bank lending has surged, mass-market property transactions are picking up, and the Chinese consumers have been relatively resilient over the last several quarters, the report said. Just months earlier China's index marked the end of 2008 by wrapping up its worst annual performance, falling more than 70 percent from a high of 6124 points in October 2007. "If you look at history, of the top 10 countries that experienced the stock index fall, about 80 percent of them saw the market rebound over 50 percent in the next year," said Lin Shaoli, chairman, Shenzhen 3Sheep Asset Management Co. Agencies contributed to this story
 (China Daily 04/03/2009 page15) |
