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Index up despite brokers’ tumble on Everbright glitch
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Shanghai stocks rallied today as IT-related shares surged on China’s plan to expand its broadband coverage. The gains offset the losses caused by the erroneous trading of Everbright Securities on Friday that sent investors on a roller coaster ride.
The benchmark Shanghai Composite Index rose 0.83 percent to 2,085.60 points, snapping a three-day losing streak. Turnover was 81.5 billion yuan (US$13.4 billion) at the trading close.
China announced a broadband development strategy on Saturday which sets targets to boost Internet speed and expand broadband coverage nationwide in a drive to upgrade the country’s information infrastructure.
Information and telecommunication shares soared following the footsteps of their peers on the Shenzhen bourse where ChiNext, a gauge of enterprises on China’s Nasdaq-style board, jumped 3.5 percent to 1,171.40 points.
Fiberhome Telecommunication Technologies Co leapt 8.4 percent to 21.18 yuan. Beijing Teamsun Technology Co jumped 8 percent to 8 yuan. Yonyou Software Co surged by the daily limit of 10 percent to 13.89 yuan.
Brokerages fell against the rising index on speculations that the stock market regulator may curb their innovative businesses after a glitch in the trading system of China Everbright Securities caused wild swings in Chinese shares.
Haitong Securities dropped 2.1 percent to 10.99 yuan. CITIC Securities shed 1.2 percent to 10.88 yuan. Southwest Securities Co slumped 3.8 percent to 9.01 yuan.
"The unexpected episode was a distraction for the A-share market which was on an upward trajectory as inflation had eased," said Guotai & Junan Securities, "Investors' appetite for risk is dwindling amid rising uncertainties."
However, Zhang Yufeng, analyst with Hengtai Securities, said the erroneous trade was an isolated incident and would not change the market fundamentals.
The trading of Everbright shares will resume tomorrow.
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