Shanghai stocks regained their footing yesterday after losing 2.21 percent since the market reopened on Wednesday after the weeklong break, with analysts predicting more fluctuation in the weeks to come.
The benchmark Shanghai Composite Index rose 71.02 points, or 1.58 percent, to close at 4568.15, with 766 of 851 stocks closing higher than the previous trading day. Turnover on the Shanghai bourse totaled 93.4 billion yuan, up 37.8 percent. The smaller Shenzhen Component Index also climbed 2.21 percent to close at 16860.55, with turnover of 47.5 billion yuan, up 47.6 percent.
"Many investors are taking a relatively cautious approach after sharp swings during the past weeks," said Zhang Fan, an analyst at Changjiang Securities. "They are waiting for enough bullish signs to convince them the market is going upward."
Analysts said the securities regulator's approval of new equity funds also helped restore investor confidence and pushed up yesterday's market.
"The launch of two more equity funds is expected to inject fresh capital into the market, which partially eased investor concern about the tightening capital supply to the stock market," said Zhang Xiaojun, an analyst at CITIC China Securities.
But analysts do not expect the market to rebound to the pre-correction high. Rather, they said it is likely to continue fluctuating in the coming weeks as institutional and retail investors are at odds over the market's short-term prospects, which will also heighten movement on the key index.
Stocks in a wide range of sectors contributed to yesterday's rally, with farm, steel and pharmaceutical shares surging particularly high.
Of the big gainers, Wanxiang Doneed Co, a fertilizer maker based in Harbin, soared 10.02 percent to end at 17.79 yuan. Beijing Wandong Medical Equipment Co climbed 6.84 percent to close at 14.83 yuan.