Investors shake off impact of latest hike

08:42, February 22, 2011      

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Shanghai's stocks yesterday rallied to a more than three-month high as investors brushed aside any impact that may arise from the latest hike in bank reserve requirement ratio, which is designed to drain excessive liquidity.

The Shanghai Composite Index climbed 1.1 percent to close at 2,932.25, its highest close since it ended at 3,014.41 on November 15. Turnover edged up to 146 billion yuan (US$22.23 billion) from Friday's 142 billion yuan.

Analysts said the reserve requirement hike to a record 19.5 percent would not have significant effect on the market as the move was long expected by investors.

Yesterday's rise in the index was also due to a rally by oil-related firms whose margins would improve after China raised fuel prices over the weekend to cushion refiners from increasing crude prices.

China Petroleum and Chemical Corp, also known as Sinopec, rose 1.4 percent to 9.27 yuan. PetroChina added 1.1 percent to 11.71 yuan.

Zhong Hua, an analyst at Guotai Jun'an Securities, forecast the market to continue to rise on the back of euphoric sentiments among investors who were cheered by the generally positive earning reports that companies have released.

"In the short term, shares will continue to go up thanks to ample liquidity in the market and the bright profit reports of companies," Zhong pointed out.

Source: Shanghai Daily
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