Stocks come back after 'breath-taking' plunge, 05/31
By Li Zengxin (chinadaily.com.cn)Updated: 2007-05-31 16:28
Stocks in the real estate sector pioneered the growth, followed by food and metal industries. China Merchants Property Development surged 10 percent to 53.89 yuan as the leading real estate developer on the top gainers list.
The two listed securities firms, Hongyuan and CITIC didn't recover from the stamp tax shock today, after yesterday's drop. They were down 9.82 percent to 31.5 yuan and 6.11 percent to 54.08 yuan respectively.
B-shares fell again, with 32 stocks closing up among the total of 109. Of the gainers, Jiangsu Xincheng Real Estate was on top of the list with a 10.01 percent price hike.
The sudden drop in the morning could be the last string of the effects from the stamp tax hike yesterday. The comeback in the afternoon might be seen as a mark of the returning of investor confidence and the start of a new round of bull run, said market analysts.
But first of all, the market needs to overcome the aftermath of yesterday's big drop. A total of 1,243.2 billion yuan vanished because of a single day's drop. The total market value of the two stock exchanges was 17,780.3 billion yuan by yesterday's closing, compared with the 19,023.5 billion yuan on Tuesday.
On the other side, the rise in stamp tax to 0.3 percent from 0.1 percent resulted in a big increase in the stamp tax collection yesterday. The 416.68 billion yuan turnover generated 2.44 billion yuan in stamp tax, up 1.63 billion yuan from the previous 810 million yuan in stamp tax to the Ministry of Finance.
The central government will not stop support to the healthy development of the capital market, analysts said. After all, China's stock market is still lagging behind the speed of its economic growth and needs further exploration and policy support.
China's economy may grow 10.4 percent this year, the World Bank said in its quarterly update released yesterday, up from a November forecast of 9.6 percent growth. It also warned of a sharp correction in the booming stock market, a warning that came the same day the bourse saw a 6.5 percent fall.
The People's Bank of China said it would speed up financial innovations, according to its 2006 China Financial Markets Development Report released yesterday.
China backs up securities companies to innovate their products, services and organizations, develop more funds, and promote the reform of close-end funds. The central bank will also allow the futures market to fully develop and launch more new commodity futures and focus on financial futures.
China's financial market structure continued to improve last year. Companies raised a total of 246.37 billion yuan in the Shanghai and Shenzhen stock markets, 628.6 percent higher than the previous year, says the report.
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