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Stocks extend rally to 11-month high

SHANGHAI stocks extended their rally to an 11-month high yesterday on the central government's decision to require some state-owned companies to transfer shares to the National Social Security Fund.

The benchmark Shanghai Composite Index edged up 0.55 percent to close at 2,896.3 - the highest level since July 28 last year - after reaching an intraday high of 2,923.24.

Turnover fell slightly to 148 billion yuan (US$21.67 billion) from 151.3 billion yuan last Friday. Losers outnumbered gainers 556 to 293 while 59 stocks were unchanged.

"The State Council's decision to order state-owned companies to transfer shares to the national pension fund is boosting investors' confidence as it reflects the central government's commitment to establishing long-term stability and healthy development of the country's securities market," said Zhu Huiling, an analyst at securities consultancy firm Jeweldia.

The central government last Friday ordered state-owned firms that were listed since 2006 to transfer to the national pension fund the equivalent of 10 percent of the shares sold in initial public offerings on the Chinese mainland market.

The measure covers 131 state-controlled companies already listed on the domestic bourses and will also apply to those which will list in the future, the government said. The move is part of an effort to finance the country's social security system as the population ages and the number of retirees rises.

Financial firms gained strongly after the Shanghai Securities News said yesterday new loans in China could reach 6.5 trillion yuan in the first half of this year from 5.83 trillion yuan in the first five months.

The Bank of China gained 4.9 percent to 4.5 yuan while the Industrial and Commercial Bank of China added 3.08 percent to 5.35 yuan. China Construction Bank rose 2.2 percent to 6.04 yuan and Ping An Insurance (Group) Co rose 3.41 percent to 46.72 yuan.


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