Index up 2.39% as stocks rally continues
Print Edition
CHINESE stocks extended their rally for a third trading day as government moves to prevent a market rout took effect and more shares resumed trading.
The Shanghai Composite Index climbed 2.39 percent to 3,970.39 points, rising as much as 3.93 percent to trade above the symbolic 4,000-point level during the day.
A total of 408 listed companies resumed trading, bringing the number of suspended companies down to 1,045 from 1,453 last Friday.
Nonferrous metals and brewers led the gains while lenders, insurers and state-owned enterprises were among the losers.
PetroChina fell 4.28 percent to 12.53 yuan (US$2.05) while the Industrial and Commercial Bank of China dropped 3.58 percent to 18.31 yuan.
The Shenzhen Component Index was up 4.78 percent to 12,614.16 points yesterday. The small-cap CSI 500 Index rallied 6.2 percent for its best gain since November 2008 and Hong Kong’s Hang Seng Index gained 1.3 percent to 25,224.01 points.
Hou Yingmin, an analyst at AJ Securities Co, said the three-day recovery was a victory in the first battle in a long-lasting war to stop a market rout, but sentiment was still fragile and could cause another round of fluctuations.
“Range-bound trading is likely to last another five to eight weeks,” Hou said.
The Shanghai gauge has rebounded nearly 18 percent over the past three trading days following the government’s efforts to end the rout that wiped some 30 percent from market value in the previous two weeks.
Last week, the China Securities Regulatory Commission banned major shareholders from selling shares for six months and asked state companies to buy public offerings of funds to help stabilize the market.
There were signs of renewed interest in leveraged bets re-emerging after the market recovery, which led the regulator to continue its crackdown on margin lending.
Some experts warned that the government’s measures should only be seen as temporary and should be withdrawn when the market returns to relative stability.
“A government-backed bull run will influence investors’ expectations, causing potential risks such as speculation and irrational trading,” said Xu Gao, chief economist at Everbright Securities Co.
“When the market is coming back on track, the government should recall its buying in the market and be tracking more on the outstanding balance of margin finance instead of the point level of index,” Xu said.
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