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October 14, 2009

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Resources firms lift key share index

SHANGHAI'S key stock index rebounded more than 1 percent at the close yesterday, led by resource-related shares on speculation that inflation would rise.

The Shanghai Composite Index added 1.44 percent to 2,936.19 points. Turnover, however, shrank to 88.5 billion yuan (US$13 billion) from 99.9 billion yuan on Monday.

"The recent gains in gold and crude prices, which are expected to benefit resource-related sectors such as coal and nonferrous metals, have triggered concerns that inflation may make a comeback," Zhou Ronghua, an analyst at TX Investment Consulting Co, said.

China Shenhua Energy Co, the nation's biggest coal producer, rose 2.7 percent to 33.06 yuan, and Datong Coal Industry Co surged 5.87 percent to 39.49 yuan.

Lenders also gained after Central Huijin Investment Co, China's US$300-billion sovereign wealth fund, pledged to continue buying shares in the country's three biggest listed state-owned banks in the open market over the next 12 months.

"The planned investment is reasonable because lenders are undervalued in this round of correction," said Mu Qiguo, a United Securities Co analyst.

"The move also indicated the government will not sharply reduce holdings when a record 2 trillion yuan worth of locked-up shares become tradable this month, which eased market concerns of a broad sell-off," he said.

The Bank of China gained 1 percent to 4.03 yuan, the Industrial and Commercial Bank of China, the nation's biggest listed lender, inched up 0.6 percent to 4.99 yuan and China Merchants Bank Co jumped 2.6 percent to close the day at 15.99 yuan.


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