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Blue chips rally to push index higher

SHANGHAI'S key stock index edged up yesterday to close above 2,600 points after heavyweights rebounded in the second half of trading.

The Shanghai Composite Index added 0.48 percent, or 12.41 points, to close at 2,610.01 points. Turnover was 112.7 billion yuan (US$16.5 billion).

There is a new pricing mechanism that favors minority investors who buy initial public offerings which are set to resume on the Chinese mainland after a nine-month hiatus. A total of 32 companies have received approval from the China Securities Regulatory Commission to launch their IPOs and it is expected that more than 14.3 billion shares will be sold once the IPOs resume.

"The index may fluctuate even more with the resumption of IPOs but in the long run we think the market will remain on an upward trend," a research note by Zhongyuan Securities said.

Not surprisingly, brokerages advanced and Haitong Securities jumped 6.31 percent to 14.33 yuan while Sinolink Securities rose 4.02 percent to 37.53 yuan.

PetroChina, largest index component, announced at the weekend that it has signed a deal to buy a 45.51 percent stake in Singapore Petroleum Co for US$1.02 billion in cash. The company gained 1.87 percent to 13.10 yuan.

Banks showed mixed results, with Shanghai Pudong Development Bank up 0.32 percent to 24.88 yuan while China Merchants Bank Co shed 0.30 percent to 16.60 yuan.


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