Shares eke out weak rebound by tech stocks ( 2003-08-27 09:24) (China Daily)
China shares eked out a weak
rebound led by tech counters yesterday after steep falls over the past week
helped ease selling pressure, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares for
foreigners and yuan-denominated A shares, finished 0.21 per cent higher at
1,425.212 points.
While the Shenzhen sub-index also gained 7.32 points, or 0.23 per cent to
close at 3188.39 points.
"Recent falls have eased selling pressure and led to a technical rebound,"
said analyst Zhang Jun at Guotai Junan Securities.
The benchmark index has already suffered a 4.63-per-cent fall since the start
of the month on liquidity pressure from an abundance of share offers and a
tightening of bank loans.
Analysts said the rebound, led by tech stocks that posted good earnings, was
aided by speculative buying in poor earners such as chicken breeder Shanghai
Dajiang Group Co.
Chronic loss-making Dajiang was the most actively traded B share and one of
the top gainers in Shanghai, ending up 2.89 per cent at US$0.285.
BOE Technology Co, a television parts maker turned high-tech hopeful, was the
second most actively traded counter, rising 2.88 per cent to HK$5.00.
"Still, the index is likely to move at low levels in the near term on lack of
follow-through buying," said analyst Yang Weidong at Minfa Securities.
Trade was slack amid weak investor confidence, while the strength in tech
counters was not enough to pull up the entire market over the longer term,
analysts said.
The Shanghai B-share index climbed 1.12 per cent to 99.906 points while its
Shenzhen counterpart edged up 0.76 per cent to 225.56.
A shortfall of money prompted a rush by Chinese banks to obtain repurchase
agreements issued by the central bank yesterday in the government's first move
to inject money into the market in seven months, dealers said.
The People's Bank of China issued seven-day repos in open market operations
to inject 60 billion yuan (US$7.25 billion) into the market - the first
injection since late January and hot on the heels of a weekend hike in bank
reserve requirements.
"The repos were snapped up, and, of course, fully subscribed," said a dealer
at a major Chinese State-owned bank. "We are really short of money, the market
is really short of money after a slew of central bank moves to tighten supply."
Reflecting the shortfall, annual rates for benchmark seven-day treasury bond
repos, traded on the Shanghai stock exchange, rose 0.75 percentage points to
finish at 4.77 per cent.
That meant costs for banks and other financial institutions to borrow money
on the market had reached their highest levels since January 23, when the
benchmark interest rate finished at 5.66 per cent, traders said.
Beijing said it would raise reserve requirements to 7 per cent from 6 per
cent from September 21, asking banks to place a larger proportion of deposits
with the central bank to drain excess money amid fears of economic overheating.
It was a long-anticipated move aimed at mopping up funds from the market to
head off potential inflationary pressure.
The broad M2 money supply rose 20.7 per cent at the end of July from a year
earlier, while outstanding loans in the first half of the year grew an annual 23
per cent to 15.9 trillion yuan (US$2 trillion) - a pace analysts deemed a cause
for concern.
But dealers said banks were now setting aside funds to meet the higher
requirement, creating a short-term squeeze in supply. There were also fears of a
more acute shortage in the near term, they added.
