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Stocks up on government investment boost
By Lydia Chen |
October 11, 2011, Tuesday
|
Online Edition
Online Edition
SHANGHAI shares rebounded from a more than two-year low in the morning session today following a market-saving move by a central government-owned investment company.
The Shanghai Composite Index climbed 0.72 percent to 2,361.59. Turnover, however, remained low at 38.12 billion yuan (US$6 billion).
Financials strengthened in early trading, led by banks, after Central Huijin Investment Ltd said after market close yesterday that it had begun stockpiling shares in the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China.
The move is considered part of a government plan to save the stock market that has slumped more than 17 percent so far this year.
ICBC, the country's biggest lender, added 1.50 percent to 4.05 yuan. The Agriculture Bank gained 2.02 percent while the Bank of China rose 2.44 percent and the Construction Bank jumped 3.85 percent.
The morning rally also boosted investors' confidence in brokerages. Haitong Securities increased 2.28 percent to 8.08 yuan.
Central Huijin pledged to continue with "related market operations," the unit of China's sovereign wealth fund said, without providing details on how much and how long it would invest and whether it would focus on Hong Kong or Shanghai shares.
The firm has a stellar investment record. On September 19, 2008, when the firm announced it was buying shares in major banks, the Shanghai index jumped by 9.5 percent on the day and rose from 1,900 to 2,300 points within a month. However, at the end of October that year, the index fell again to 1,664 points.
However Chen Li, China A-share strategist at UBS Securities, said that Huijin's investment drive was not enough to stop the market from sliding further.
"The A-share market will suffer another blow that may drag the benchmark index to a new low," Chen said.
The Shanghai Composite Index climbed 0.72 percent to 2,361.59. Turnover, however, remained low at 38.12 billion yuan (US$6 billion).
Financials strengthened in early trading, led by banks, after Central Huijin Investment Ltd said after market close yesterday that it had begun stockpiling shares in the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China.
The move is considered part of a government plan to save the stock market that has slumped more than 17 percent so far this year.
ICBC, the country's biggest lender, added 1.50 percent to 4.05 yuan. The Agriculture Bank gained 2.02 percent while the Bank of China rose 2.44 percent and the Construction Bank jumped 3.85 percent.
The morning rally also boosted investors' confidence in brokerages. Haitong Securities increased 2.28 percent to 8.08 yuan.
Central Huijin pledged to continue with "related market operations," the unit of China's sovereign wealth fund said, without providing details on how much and how long it would invest and whether it would focus on Hong Kong or Shanghai shares.
The firm has a stellar investment record. On September 19, 2008, when the firm announced it was buying shares in major banks, the Shanghai index jumped by 9.5 percent on the day and rose from 1,900 to 2,300 points within a month. However, at the end of October that year, the index fell again to 1,664 points.
However Chen Li, China A-share strategist at UBS Securities, said that Huijin's investment drive was not enough to stop the market from sliding further.
"The A-share market will suffer another blow that may drag the benchmark index to a new low," Chen said.
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