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Developers and tourism chips lead Shanghai index higher
By Lydia Chen |
April 18, 2011, Monday
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Online Edition
Online Edition
SHANGHAI'S key stock gauge edged up higher today, brushing aside pressures from China's latest tightening move that aimed at reining in inflation.
The benchmark Shanghai Composite Index was up 0.22 percent to 3,057.33, extending its rise of 0.3 percent last week, when it ended at a five-month closing high. Turnover was 160.81 billion yuan(US$ 24.63 billion).
Tourism and property sectors supported the market rise, as analysts said liquidity remained ample in spite of the People's Bank of China raising the reserve requirement ratio for banks.
The People's Bank of China said yesterday that reserve ratios will rise 0.5 percentage point from Thursday, which came less than two weeks of the latest interest rate hike.
"The rise itself now can hardly makes any difference to the market because liquidity is more than enough," said Zhong Hua, an analyst with Guotai Junan Securities.
"The government will continue to use more tightening measures to drain excessive money which it threw into the market two years ago in order to keep the economy rolling amid the global crisis," he added.
China recorded a 24.4 percent year-on-year increase in its foreign exchange reserves to US$3.04 trillion through the end of March while nearly 450 billion yuan in central bank bills and repos will mature in the next two weeks alone.
Hotels and tourism-related shares performed strong today, which Zhong said was partly because of the upcoming May Day holiday that may sharply boost companies' incomes.
China International Travel Service Corp jumped 4.09 percent to 29 yuan.
The sub-index for property sector gained 1.29 percent, despite data showing China's house prices posted slower growth in March after a slew of curbing measures.
Analysts said the low valuation of property companies attracted bargain hunting by investors, and positive earnings results and sales data also supported the sector.
Shanghai Shimao Co advanced 3.47 percent to 15.49 yuan.
But Zhong cautioned that developers may face increasing liquidity pressure if China continues to repeatedly raise interest rates and banks' reserve rate, which is expected to hurt firms' profits.
He overweighed blue caps like banks, insurers and brokerages that are now in low valuations.
The view was echoed by managers at Shanghai-based Franklin Templeton Sealand Fund Management Co, who expected the mainland's banking stocks may gain a further 20 percent this year, according to Bloomberg News.
The benchmark Shanghai Composite Index was up 0.22 percent to 3,057.33, extending its rise of 0.3 percent last week, when it ended at a five-month closing high. Turnover was 160.81 billion yuan(US$ 24.63 billion).
Tourism and property sectors supported the market rise, as analysts said liquidity remained ample in spite of the People's Bank of China raising the reserve requirement ratio for banks.
The People's Bank of China said yesterday that reserve ratios will rise 0.5 percentage point from Thursday, which came less than two weeks of the latest interest rate hike.
"The rise itself now can hardly makes any difference to the market because liquidity is more than enough," said Zhong Hua, an analyst with Guotai Junan Securities.
"The government will continue to use more tightening measures to drain excessive money which it threw into the market two years ago in order to keep the economy rolling amid the global crisis," he added.
China recorded a 24.4 percent year-on-year increase in its foreign exchange reserves to US$3.04 trillion through the end of March while nearly 450 billion yuan in central bank bills and repos will mature in the next two weeks alone.
Hotels and tourism-related shares performed strong today, which Zhong said was partly because of the upcoming May Day holiday that may sharply boost companies' incomes.
China International Travel Service Corp jumped 4.09 percent to 29 yuan.
The sub-index for property sector gained 1.29 percent, despite data showing China's house prices posted slower growth in March after a slew of curbing measures.
Analysts said the low valuation of property companies attracted bargain hunting by investors, and positive earnings results and sales data also supported the sector.
Shanghai Shimao Co advanced 3.47 percent to 15.49 yuan.
But Zhong cautioned that developers may face increasing liquidity pressure if China continues to repeatedly raise interest rates and banks' reserve rate, which is expected to hurt firms' profits.
He overweighed blue caps like banks, insurers and brokerages that are now in low valuations.
The view was echoed by managers at Shanghai-based Franklin Templeton Sealand Fund Management Co, who expected the mainland's banking stocks may gain a further 20 percent this year, according to Bloomberg News.
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