Key index rebounds from three-month low ( 2003-07-03 08:09) (China Daily)
A strong showing by China's market bellwether Shanghai Automotive helped the
key stock index stage a technical rebound Wednesday from a three-month closing
low, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares open
to foreign investors and yuan-denominated A shares, closed up 1.01 per cent at
1,499.682 points after finishing on Tuesday at its lowest since late March.
The Shenzhen sub index also climbed up 1.17 per cent to 3,263.96 points.
Shanghai Auto's A shares were one of the top gainers and most active issues,
jumping 4.01 per cent to 12.72 yuan (US$1.54), buoyed by a recommendation by a
major brokerage, brokers said.
BOC International predicted the auto parts producer would post strong results
over the next two years on the back of a booming domestic vehicle industry,
brokers said.
The forecast boosted Shanghai Auto, whose shares had already doubled since
the start of 2003 as investors favoured auto stocks due to a rosy outlook of the
sector.
"Renewed strength in Shanghai Auto sparked a buying spree in shares of other
vehicle stocks, helping the broad market stage a decent rebound,'' said analyst
Shao Rui at Shanghai Securities.
Investors have favoured the booming auto and steel sectors this year. Steel
maker Baoshan's share have been up about 26 per cent since the beginning of this
year.
"While the broad market was weak, investors selected auto and steel companies
due to their strong corporate fundamentals,'' said Dai Yizhong, an analyst at
Guotai Jun'an Securities.
B shares in China's biggest minivan maker, Chongqing Chang'an Automotive,
were the most active on the hard-currency markets, closing up 3.62 per cent at
HK$6.58 (84.35 US cents).
Chang'an Auto's gains helped Shenzhen's B-share index rise 0.69 per cent to
217.20 points. Shanghai's B shares ended up 0.82 per cent at 113.206.
Despite yesterday's rebound, the Shanghai composite index has fallen 4.28 per
cent since mid-June on fears of a crackdown on the illegal use of bank loans to
buy stocks and worries about corporate earnings ahead of the interim results
season.
Analysts said they saw some more technical buying in the near term as recent
falls had capped the downside, but there was little chance of an immediate
market recovery.
"The rebound today did not come in decent volumes, indicating that the market
had not reversed its overall weakness,'' said analyst Hu Weitao at Eagle
Securities.
Analysts said they expected the composite index to move narrowly between
1,460 and 1,520 over the next few days.
Shenzhen's A index edged up 0.71 per cent to 429.42 points and Shanghai's
added 1.01 per cent to 1,570.234.
China's yuan ended a notch weaker at 8.2775 against the dollar yesterday,
staying firm within a government-set trading range, dealers said.
The yuan moved narrowly between 8.2773 and 8.2776 throughout the session.
Turnover, thin at US$470 million on Tuesday, was not immediately available.
Over the past two years, the yuan has hovered near the firm end of the
wafer-thin trading range of 8.2760 to 8.2800 the central People's Bank of China
usually enforces, buoyed by healthy trade surpluses and strong foreign
investment.
