|
BIZCHINA / Center |
Stocks rocket 2% in morning sessionBy Li Zengxin (chinadaily.com.cn)
Updated: 2007-07-09 12:11 Chinese stocks continued surging this morning, with the Shanghai Composite Index closing at 3859.12, up 77.77 points or 2.06 percent by the noon break. Opening higher from 3,809.67, the benchmark index formed a clear upward trend after a few short-ranged swings. It went through the morning session within a range from 3,782.73 to 3,860.66, both higher than the closing of last Friday. The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, opened higher from 12,519.61 and closed at 12,819.52, up 424.17 points or 3.42 percent. Large-cap blue chips, including the Industrial and Commercial Bank of China, China Unicom, TCL and Jilin Aodong Medicine Industry Group, were all up to lift up the indices. Stocks in the mining, timber and services industries were particularly strong. Shanxi Xishan Coal and Electricity Power rocketed 10 percent to lead other mining shares. Financial shares performed also well this morning. Analysts attributed the violent fluctuations in the past month to a set of measures that brought severe pressure on capital outflow expectations, including a higher stamp tax rate , red chip listings on the mainland, enlargement of qualified domestic institutional investors, speeding up of initial public offerings by domestic enterprises, the proposed issue of 1.55 trillion special treasury bonds and a possible slash in interest tax. These measures were planned when the stock market hit the historical heights of over 4,300-point late in May. But at the time when they were released, investor confidence had been already low due to the "shock" move by the stamp tax hike overnight on May 29. Regulators then released a series of "conciliating" announcements, telling investors the measures will not hurt the stock market much. But analysts believe it is hard to recollect the lost "optimism". Some even think the market is turning to a "slow bear" from a "fast bull". As the latest move, the State-owned enterprises (SOE) watchdog last Friday released new rules to guide SOEs selling their shares on capital markets. The rules aims to better regulate SOE share transactions and slow down the pace by SOEs in adding share supplies to the market. According to the rules jointly released by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and the China Securities Regulatory Commission, an SOE with a capitalization of no more than 1 billion yuan will need approval from the SASAC if the combined shares it sells in three consecutive fiscal years exceed 5 percent of its total capitalization. For an SOE with a capitalization more than 1 billion yuan, it will need additional approval if the combined shares it sells in three consecutive fiscal years exceed 50 million yuan or 3 percent of the total capitalization. These rules were posted on SASAC's official website for public opinions. The SOE watchdog also allowed SOEs to sell their shares to strategic investors at a discount based on an average of its share prices in the previous 30 days. The discount should not be lower than 90 percent, it said. Industrial experts said the rules target the stability of the stock market and will reduce excessive stock supply to the market to balance demand-and-supply relationship in capital and shares. "The rules granted SASAC to control the speed of large-cap SOEs in share issuance, which might prevent new shares in enormous amounts flooding into the market, which might not be able to digest them easily," said an analyst. (For more biz stories, please visit Industry Updates)
|
|