Shanghai market surges, snapping 10-day decline

By Lydia Chen  |   2008-6-18  |     ONLINE EDITION

SHANGHAI'S key stock index increased strongly today, snapping a 10-day losing streak as investors judged the losses as excessive after the index fell more than 50 percent from its record high in October.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, added 5.24 percent, or 146.36 points, to 2,941.12 at 3pm.

Gainers in the Shanghai market outnumbered losers 780 to 16 while two were unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was up 5.14 percent, or 41.12 points, to 843.19.

Stocks gained on speculation the government will intervene to support the market following its 10-day, 19 percent rout, which cut the benchmark index's price earnings ratio to the lowest in two years. Shares had fallen on concern central bank measures to combat rising inflation will erode earnings growth.

China Petroleum & Chemical Corp, or known as Sinopec, and PetroChina Co advanced after a regulator's comments led to speculation the government will increase fuel prices.

Sinopec, the nation's biggest oil refiner, jumped 9.97 percent to 13.01 yuan (US$1.89) while PetroChina, the largest oil producer and the biggest market heavyweight, climbed 5.58 percent to 16.09 yuan.

PetroChina Co will increase the supply of oil products by 12 percent in each of the next three months to Guangdong as the southern Chinese province battles rainstorms, Xinhua news agency reported, citing local government.

The government will use "prudence'' in raising fuel prices, Zhang Xiaoqiang, vice chairman of China's National Development and Reform Commission, told reporters yesterday.

"Large increases in fuel prices require prudence'' due to inflationary pressure, Zhang said during the semi-annual China-US Strategic Economic Dialogue, or SED. "The key is to choose the appropriate time.''