Blue chips likely to shore up rise
By Leo Zhang (Shanghai Daily)Updated: 2007-04-02 08:35 Shanghai shares may continue to inch up this week as blue chips such as financial counters are likely to be chased on their earnings prospects. The proposed launch of stock-index futures will also stimulate interest.
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The Shanghai Composite Index, which covers yuan-denominated A shares and hard-currency B shares, closed Friday at 3,183.98, wrapping up a weekly gain of 3.57 percent.
Turnover hit 15.28 billion yuan (US$1.98 billion) on Wednesday, an all-time high. For the week, the combined trading value amounted to 60.5 billion yuan.
"The market still operates under a strong sentiment," said Chen Jinren, a Huatai Securities Co analyst. "There's limited room for heavyweight banks to drop as they generally feature rosy earnings and can benefit from recent interest rate rises."
Bank of China Co, the country's No. 2 lender, shed 2.12 percent to 5.55 yuan on Friday after jumping 9.88 percent in the previous three sessions.
Industrial & Commercial Bank of China, the nation's top lender, also lost 1.79 percent on Friday to finish at 5.49 yuan, snapping up a three-day 9.39 percent gain.
Chinese stock authorities have said they planned to unveil the country's pilot stock-index futures by the first half of the year, which are to be based on a barometer that tracks top 300 mainland-listed firms.
Market watchers noted institutional investors such as mutual funds and insurance firms might switch to blue chips ahead of the index futures' debut to put them in a good position to snap up business.
"The performances of large-cap stocks, including banks, steel makers, petrochemical firms and property developers, will decide where the overall index will drift in April or even the entire half year," said analysts at Beijing Shoufang Investment Consulting Co in a note.
The consultancy predicts the Shanghai index to move in a wider range between 3,000 and 3,350 this week. It advised investors should pay close attention to banks including BOC and ICBC as well as China Life Insurance Co.
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