Shanghai stocks soar to 5-year high
By Zhang Ran (China Daily)Updated: 2006-11-21 15:50
A continuing massive inflow of domestic and foreign funds yesterday pushed the Shanghai stock index to a 5-year high with much of the buying concentrated in banks and blue chips.
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The index is up about 72 percent since the beginning of this year, making China one of the world's best-performing equities markets.
The rally gathered steam after the government initiated regulatory and structural reforms to convert 250 billion U.S. dollars worth of State-owned non-tradable shares to tradable ones.
The market surge is also a reflection of China's fast-growing economy and wide expectations of the yuan's further appreciation.
These factors have combined to suck in a continuous inflow of investment funds from institutions, analysts said.
The exchange rate of the renminbi against the U.S. dollar hit a new high last Monday, with the central parity rate at 7.8644. The rate was 7.869 yesterday.
Figures from Shanghai-based Wind Data show that since September, 22 mutual funds have raised 80.6 billion yuan (10.2 billion U.S. dollars) to invest in the market.
In the past two weeks alone, eight mutual funds raised a combined 30 billion yuan (3.8 billion dollars), indicating a new wave of capital for equities.
It predicted that by the end of this year, more than 100 billion yuan of
(12.7 billion dollars) new capital would flow into the market.
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