Stocks stay firm, 04/06
By Jin Jing (China Daily)Updated: 2007-04-07 10:42
SHANGHAI: The Shanghai stock market on Friday brushed off the latest increase in banks' reserve requirement ratio announced on Thursday, with the index standing at 3323.59, up 0.13 percent from the day before.
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Turnover on the Shanghai Stock Exchange amounted to 122 billion yuan, up 6 percent from the day before. The smaller Shenzhen Composite Index climbed 1.2 percent to close at 9268.23.
Analysts said the reserve requirement hike, which takes effect on April 16, will have a minor impact on China's stock markets, though it came a little earlier than expected.
"This is just a run-of-the-mill adjustment that investors should not spend any time worrying about," Jonathan Anderson, chief economist of United Bank of Switzerland (UBS) Asia, said in a written comment.
Stephen Green, senior economist of Standard Chartered Bank, said the reserve rate hike was within his expectations. "We have been expecting the People's Bank of China to raise the reserve ratio once every quarter this year," he said.
As expected, the share prices of all banks fell in Friday's trading. But the decline was slight. Industrial Bank Ltd, which made its debut on February 15, was down 3.3 percent to 28 yuan. The Industrial and Commercial Bank of China fell 1.8 percent to close at 5.45 yuan, while Bank of China slid 1 percent to close at 5.63 yuan.
"The drop in bank prices was nothing more than an adjustment after rising for a long time," said Zhang Yidong, an analyst at Industrial Securities.
"The reserve rate hike however has great significance because the stock market is still flushed with liquidity," he said.
Share prices of companies in the real estate sector rose the most. Financial Street Holding Co Ltd, the Beijing-based real estate developer, surged to the daily allowable limit to close at 18.48 yuan. Poly Real Estate Group Co Ltd rose 8.85 percent to close at 31.6 yuan.
Companies in the non-ferrous metals sector also fared well due to strong performance in the commodities market, analysts said.
(China Daily 04/07/2007 page10)
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