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Stock index soars over 3,000

SHANGHAI'S key stock index yesterday conquered the symbolic 3,000 level for the first time in a year, after economic indicators added to signs of economic recovery in China.

The local market outperformed in the first half, leaving market watchers optimistic on prospects for the second half.

The Shanghai Composite Index added 1.65 percent, or 48.79 points, to close at 3,008.15, after touching a low of 2,947.69 points. It is the first time the local benchmark index has broken the 3,000 barrier since June 12 last year.

Turnover rose to 153.79 billion yuan (US$22.62 billion) from 143.7 billion yuan the previous trading day.

The local benchmark index has gained an accumulated 62.58 percent this year thanks to government stimulus packages and affluent liquidity after the barometer had tumbled more than 70 percent last year to its low of 1,820 at the end of last year.

Combined market value of the two domestic bourses also rebounded to 20 trillion yuan (US$2.94 trillion), with share prices of more than 500 stocks across the bourses doubling this year.

"The rise in the local index accelerated in the afternoon as the improved Purchasing Managers Index signaled further economic recovery," said Zhong Jian, an analyst from Orient Securities Co. "Meanwhile, investors were optimistic about first-half corporate earnings to be released soon."

The PMI, a measure of manufacturing activity, reached 53.2 last month, the fourth consecutive month it has been above 50.

A reading above 50 indicates expansion.

"China will continue to have strong domestic demands as the government will strengthen their efforts to bolster the economy. And the valuation of local shares are still very attractive," said Pu Yonghao, a senior analyst from UBS wealth management.

"China is expected to be the best among Asian markets," Pu added.

In its latest report, JPMorgan predicted the key stock index would rise above 3,200 points this year.

"Recovery in the stock market is closely relevant to market confidence while investors were positive towards China's economic outlook, which would continue to propel the market on the upward track," JPMorgan wrote in the research note.


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