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Shanghai stocks breach 6000 mark on corporate earnings
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08:18, October 16, 2007

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The Shanghai stock market surged 2.15 percent yesterday to close at 6030.09, breaking through the 6000 barrier for the first time during the course of the day.

Led by oil and petroleum, and non-ferrous metal shares, the benchmark Shanghai Composite Index jumped 126.82 points, with 389 of 906 stocks closing higher. The smaller Shenzhen Composite Index climbed 0.46 percent to close at 1524.57. The Hang Seng index rose 2.51 percent to close at 29561.98.

The total market value of listed companies on both the Shanghai and Shenzhen bourses amounted to 29.8 trillion yuan ($3.8 trillion) yesterday, accounting for 143.5 percent of China's GDP.

The number of investor accounts reached 127.41 million by last Friday, according to China Securities Depository Corporation Limited. Institutional investors held over 49 percent of the shares circulating in the market.

Analysts said investor confidence was strengthened by the positive remarks on capital markets made by Party leader Hu Jintao at the 17th CPC National Congress yesterday.

Hu called for pushing forward the reform of the country's financial system, developing financial markets and forming an efficient and secure modern financial system.

In addition, the milder-than-expected hike in banks' reserve ratio announced last Saturday eased investor worries over further tightening policies in the near term. The ratio was raised to 13 percent, the eighth hike this year.

"Investors' confidence was boosted both by positive comments made by Hu and sound third-quarter corporate earnings," said Wu Feng, an analyst at TX Investment Consulting Co Ltd.

"Besides, institutional investors are continuing to snap up blue-chip stocks to prepare for the launch of stock index futures," Wu added.

A total of 194 out of 541 listed companies that had announced third-quarter profits until October 9 posted over 50 percent growth in net profit in the first nine months of this year.

Zhu Haibin, an analyst at Essence Securities, said plentiful liquidity in the capital market pushed the stock index to new highs, even after the central bank raised the banks' reserve ratio by 0.5 basis points and issued special bonds to mop up liquidity.

Source: China Daily

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