Error sinks brokerage equities

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By Xie Yu in Shanghai (China Daily) 10:45, August 20, 2013

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The mainland's stock market rose moderately on Monday, with brokerages falling after a trading error at Everbright Securities Co Ltd last Friday caused market gyrations.

Communications-related shares rallied as the government vowed to expand the country's broadband network.

The benchmark Shanghai Composite Index rose 0.8 percent to 2,085.60 points. Turnover reached 81.5 billion yuan ($13.3 billion), down from 123.1 billion yuan on Friday.

Analyst said the incident at Everbright exposed loopholes in brokerages' internal risk-control systems, and that may lead to closer regulatory scrutiny. It could also affect brokerages' proprietary trading business, they said.

The brokerage index declined 1.59 percent. CITIC Securities Co Ltd, the biggest brokerage on the mainland, lost 1.18 percent, while the second-biggest, Haitong Securities Co, was down 2.05 percent.

Everbright Securities reported a trading loss of 194 million yuan on Monday because of its unintended buying orders caused by the system error. The shares have been suspended until Tuesday.

China Everbright Ltd, which holds a stake in the brokerage, fell 1.6 percent in Hong Kong.

On the other hand, ZTE Corp, China's second-largest telecommunications equipment maker, and Yonyou Software Co Ltd, both rose by the 10-percent daily limit.

Shares of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co Ltd surged 8 percent.

China will strive to complete broadband coverage of urban and rural areas by 2020, according to a document issued by the State Council on Saturday.

The strategy aims to achieve WiFi coverage in key public urban areas by 2013 and fixed broadband coverage for half of Chinese households by 2015, the announcement said.

The government will boost spending on fiber optic and wireless networks, the announcement said.

Indexes that cover technology and telecommunications shares have surged more than 40 percent this year, in contrast to a more than 8 percent decline of the Shanghai Composite Index.