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Market rises as sentiment improves
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09:21, April 30, 2008

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The mainland stock market yesterday rose 1.4 percent, as investors lapped up shares of stockbrokers after they reported better-than-expected quarterly earnings.

The benchmark Shanghai Composite Index climbed 48.69 points to close at 3523.41, with 603 out of 914 stocks closing higher. The Shenzhen Component Index rose 0.77 percent, or 98.38 points, to close at 12880.88.

The turnover on the two bourses amounted to 141.9 billion yuan, down 9.6 percent from Monday. The total capitalization dropped 0.2 percent to 22.89 trillion yuan.

Stockbrokers performed well in yesterday's trading. Sinolink Securities surged to the daily limits to close at 50.12 yuan after it reported a 367.5 percent earnings increase in the first quarter. Changjiang Securities also soared 9.98 percent and Haitong Securities jumped 7.02 percent to 48.17 yuan.

"Sound corporate earnings of stockbrokers have boosted investor sentiment," said Wu Feng, an analyst at TX Investment Consulting Co Ltd.

"The impending margin trade for securities companies and the launch of stock index futures are expected to lift brokerage income of securities companies," said Wu, adding the stamp tax cut will also activate stock trading and boost fee-based income of brokers.

In addition, the China macroeconomic index released by the National Bureau of Statistics yesterday showed the economy was still in the safe zone in the first quarter, which stabilized investor sentiment to some extent, analysts said.

Electricity companies performed well as they expect to get regular subsidies from the government. GD Power Development Co Ltd soared 8.86 percent to close at 6.76 yuan while Shanghai Power jumped 5.92 percent.

Shares of coal companies rose because of surging domestic coal prices, which are expected to boost their earnings. "The average earnings growth of coal companies in the first quarter is expected to be 40 to 50 percent, and for the whole year, it is expected to reach around 40 percent," said China Galaxy Securities Research in a report.

Du Changjiang, an analyst at China Merchants Securities, said there were distinct signs that showed capital inflows into financial and Olympics-related companies in the past week.

Wu at TX Investment Consulting said: "It is still too early to judge where the stock market is heading because of macroeconomic uncertainties."

A total of 230 billion yuan of non-tradable shares will be converted into tradable shares in May.

Mutual funds have seen a recovery in sales. A new mutual fund, managed by China International Fund Management Co Ltd, has received nearly 100 million yuan in subscription on the very first day of sales, also mirroring an improvement in investor sentiment.

Source: China Daily

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