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August 25, 2009

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Corporate earnings boost stocks

SHANGHAI'S key stock index rose more than 1 percent yesterday as corporate earnings were indicative of an economic recovery.

The benchmark Shanghai Composite Index added 1.1 percent, or 32.66 points, to close at 2,993.43. Turnover was 138.83 billion yuan (US$20.42 billion), almost the same as last Friday.

Of the 1,105 companies that have released interim reports, including eight newly listed enterprises, aggregate net profit reached 287.5 billion yuan in the first half, down 2.27 percent from a year ago.

However, the same companies, excluding the eight newly listed firms, reported net earnings of 162 billion yuan in the second quarter, up 31.6 percent from the first quarter, indicating the economy was recovering.

"The year-on-year drop in first-half earnings narrowed significantly, which boosted investor confidence and will push stocks forward in the short term," Golden Sun Securities Co wrote in a research note. "There is not much room for a near-term plunge."

Copper producers advanced after copper futures jumped the daily cap of 5 percent in Shanghai. Jiangxi Copper Co, the nation's biggest producer of the metal, surged 6.89 percent to 39.43 yuan. Yunnan Copper Co soared 8.49 percent to 32.59 yuan.

"The sluggish turnover and slack heavyweights indicated investors are still cautious," said Wu Ling, an analyst from S&E Securities Brokerage.


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