Shanghai shares on a high with biggest daily gain for 2 years
Print Edition
CHINESE shares leaped by more than 4 percent yesterday, with the benchmark Shanghai Composite Index hitting its highest level since May 3, 2011.
The Shanghai index surpassed the psychologically important 2,800-point mark less than 30 minutes after opening. It continued rising and reached as high as 2,900.51 several minutes before closing at 2,899.46, a 4.31 percent increase and its biggest daily gain since December 2012.
The smaller Shenzhen Component Index jumped by 4 percent to reach 10,029.83, surpassing the 10,000-point mark for the first time since June 1, 2012.
The combined turnover in Shanghai and Shenzhen stood at 887.51 billion yuan (US$144.52 billion), slightly down from Wednesday’s 914.9 billion yuan.
Shanghai’s rise was the most in two years as investors bet on shares of financial companies and the nation’s biggest companies amid expectations of further economic stimulus measures.
The Shanghai Shenzhen CSI 300 Index, which tracks the performance of 300 stocks with the largest market capitalization, also rallied 4.6 percent to 3,104.35, the highest level since July 2011.
Oil and gas companies Sinopec Co and PetroChina Co led the rise yesterday, both surging by the daily limit of 10 percent, sending Sinopec to 6.25 yuan and PetroChina to 9.21 yuan.
Shanghai’s stock market has been on a rise since April when a plan to link the Shanghai and Hong Kong exchanges was unveiled. Hopes that the link will lure more foreign capital have driven the benchmark index up more than 35 percent since then, heading for its best performance since 2009.
Enthusiasm for stock investment was further encouraged after the central bank unexpectedly cut interest rates last month by 40 basis points, its biggest reduction since November 2008 at the height of the global financial crisis.
Expectation is running high that China is open to more rate cuts as latest figures, including purchasing managers’ indexes, indicate that the world’s second largest economy is still on a weak footing and weakness in the country’s property market continues.
“We expect China’s central bank will lower interest rates by another 40 to 50 basis points by the end of 2015 to lower financing costs and rein in the growth of bad loans,” UBS said yesterday.
The rally is spurring investors to open stock accounts at the fastest pace in three years.
Investors opened 369,000 new accounts to trade A shares last week, posting the biggest weekly growth since March 2012, data from China Securities Depository and Clearing Corporation Ltd showed.
Securities companies led the market rise, with all 19 listed brokerages surging over 9 percent and 14 hitting the 10 percent daily limit.
Lenders also surged. China Minsheng Banking Corp soared 9.4 percent to 8.99 yuan. Industrial Bank leapt 7.4 percent to 13.29 yuan.
However, Zhang Qi, an analyst at Haitong Securities, said the market may be heading for a correction next week.
The market is still dogged by economic weakness and a huge backlog of initial public offerings.
As of November 27, a total of 579 companies were waiting for the regulatory approval that will allow them to list on the Shanghai and Shenzhen markets.
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