Stocks surge to new record high

Updated: 2006-12-18 16:23

Stock investors monitor the change of the Shanghai Composite Index in a securities company office December 18, 2006. [newsphoto]

Chinese shares climbed to another record high on Monday, with investors snapping up banks and property developers on expectations for further appreciation of the yuan against the US dollar.

The benchmark Shanghai Composite Index gained 2.6 percent to 2,332.43, close to its intraday peak of 2,335.23. The Shenzhen Composite Index rose 2.3 percent to 537.70.

Funds have continued to flow into the markets on expectations that a stronger yuan will buoy banks and property stocks, analysts said. A stronger local currency boosts the relative value of real estate and other local assets.

"Though the market has posted a significant gain in the past year, investors are holding onto shares for now on hope of more rises in the coming year," said Liu Yisong, an analyst at Galaxy Securities.

China's biggest lender, Industrial & Commercial Bank of China Ltd., rose 5.6 percent to 4.56 yuan, and China Merchants Bank gained 6.0 percent to 14.78. China Vanke, the largest property firm by capitalization on mainland bourses, jumped 6.8 percent to 14.15.

Bank of China rose 1.6 percent to 3.92 after its success in bidding for Singapore Aircraft Leasing Enterprise. The Chinese state bank said Friday it will pay US$965 million (euro736.3 million) for all outstanding shares in the Singapore-based firm.

Liquor makers were also among the day's gainers on expectations China's growing middle class will help boost the sector's revenue in the next few years, analysts said.

Sichuan Swellfun rose 2.3 percent to 13.10, Luzhou Lao Jiao gained 5.2 percent to 24.25 and Kweichow Moutai jumped 9.2 percent to 86.40.

In currency dealings, surging dollar supplies held by Chinese exporters pushed the yuan higher, traders said.

On the over-the-counter market the dollar was at 7.8243 around 0720 GMT, down from Friday's close of 7.8275.

The US dollar was at 7.8235 on the automatic price matching system, down from Friday's close of 7.8261.

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