Steel Stocks Push Market Up

China's stocks continued to rally to close stronger Thursday on the back of a good performance by steel shares.

Domestic A shares gained fresh ground as the steel sector staged sharp gains on expectations of rosy interim results, and continued to bolster the mood in the market, brokers said.

Both composite indices closed at new highs Thursday.

Shanghai's composite index gained 5.618 points to 2,036.301. Turnover was 14.07 billion yuan (US$1.7 billion), up from Wednesday's 12.95 billion yuan (US$1.56 billion).

Shenzhen's composite index also surged by 17.50 points to close at 4,916.64. Trading volume in Shenzhen was 15.5 billion yuan (US$1.87 billion), higher than the 12.73 billion yuan (US$1.54 billion) of the previous session.

The renewed advance in domestic A shares, following a week-long consolidation, also helped drive the B share rally, brokers said.

Overseas buyers, who had long shunned the sluggish hard-currency stocks, appeared to have come back into the market, which could help support further price advances, some brokers said.

"Buying interest rotated into middle-tier stocks,'' said a trader at a foreign securities house.

Shanghai's B-share index rose 1.505 points to 64.117.

Shenzhen's B-share sub-index increased 8.03 points to 834.34.

In Shenzhen, Bengang Steel Co was among the most active B shares with a massive 11.43 million shares changing hands.

The counter ended up HK$0.02 at HK$1.91 and led a sectoral advance based on expected sound interim earnings helped by higher prices for steel products, brokers said.

Traders said the markets could put on further gains today, but said there could be a correction next week as another batch of once non-tradable stocks, 270 million domestic A shares, were slated for listing next Monday.

That could help trigger profit-taking in A shares, whose recent surges have spilled over into the hard-currency markets, they said.

The Dow Jones China 88 Index gained 0.82 of a point to end at 197.71 yesterday.

The Dow Jones Shanghai Index went up 0.52 of a point to conclude at 256.19 and the Dow Jones Shenzhen Index increased 0.87 of a point to finish at 255.28 Thursday.



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