Stocks break record 5,400 points despite interest hike
Updated: 2007-09-17 17:37
In a full-scale inflation period, resource-related industries such as mining, metal, oil and real estate are expected to be chased by investors because of their scarcity, said analysts. Besides steel makers, stocks in the media, transportation and petrochemicals industries were particularly strong today and led the surges in the market.
The central bank raised interest rates for the fifth time this year on Friday as part of its continuing efforts to arrest the rising inflation graph and prevent the economy from overheating.
The benchmark one-year lending and deposit rates will be raised by 0.27 percentage points from September 15, the People's Bank of China, the central bank, said on its website. This means the one-year lending rate will increase from 7.02 percent to a nine-year high of 7.29 percent, and the deposit rate will rise from 3.6 percent to 3.87 percent.
More pressure is coming from the expansion of the market capitalization. A set of Hong Kong-listed heavyweights are set to drain the floating capital from the market, helping alleviate excessive liquidity and also slowing down the comparative growth of the market when they are floated due to their large share bases, said analysts.
Hong Kong-listed China Construction Bank (CCB) kicked off online subscription for its A shares today. CCB will net up to 58.05 billion yuan selling yuan-backed 9 billion A shares in Shanghai, the largest on the domestic market to date, Friday's China Business News reported.
CCB is offering shares at a price ranging between 6.15 yuan and 6.45 yuan per share, the nation's second-largest bank said in a statement to the Shanghai Stock Exchange. The online portion of the A shares are open for subscription at the upper band of the price range, representing a price to earnings ratio of 32.91.
Final pricing will be set on September 19, with A shares to begin trading on the Shanghai bourse on September 25. Analysts estimate the total amount frozen for the subscription could be as large as 2 trillion yuan, one tenth of the country's gross domestic product of 2006, refreshing the previous record by Bank of Beijing with 1.9 trillion yuan.
Shenhua Energy, China's largest coal producer, announced that it planned to issue up to 1.8 billion A shares, or 9 percent of its expanded share capital, for a listing in Shanghai. The China Securities Regulatory Commission said it will review China Shenhua Energy's plan for an initial IPO on the Shanghai Stock Exchange today.
Analysts said the company is expected to raise around 67 billion (US$8.92 billion) yuan from its Shanghai listing, which would be the mainland's largest share sale yet or global largest IPO this year.
Growth in the domestic market hasn't dampened sales of overseas investment products. Instead, China would experience a fund sales peak by qualified domestic institutional investors (QDIIs) that will invest mainlander's money in the peripheral markets, industrial experts said.
China's first overseas stock-oriented QDII fund has been approved to increase its fund sales limit to 30 billion yuan, Friday's Shanghai Securities Journal reported.
China Southern Fund Management Co Ltd said the State Administration of Foreign Exchange had officially approved its application to increase the fund sales, as subscription was near to 50 billion yuan in the first day, far exceeding the scheduled limit of 15 billion yuan.
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