Rally lifts index to rise 3.01%

By Zhang Fengming  |   2008-6-21  |     NEWSPAPER EDITION

SHARES in Shanghai rebounded yesterday with the benchmark index recovering 3.01 percent after experiencing a roller-coaster ride this week.

The key Shanghai Composite Index, which tracks both yuan-backed A shares and US dollar-denominated B shares, closed 82.86 points higher at 2,831.74. The rebound came after a 6.54 percent tumble on Thursday and a 5.24 percent rise on Wednesday. Despite yesterday's rise, the index still shed 1.3 percent this week.

Turnover rose to 79.22 billion yuan (US$11.5 billion) yesterday from the previous session's 59.63 billion yuan. Gainers outnumbered decliners 558 to 222 yesterday with 73 companies flat.

"A single-day surge is not a good thing in a rather weak market," said Wan Bin, a GF Securities Co analyst. "Such a rise will prompt some investors to sell shares to cash in."

Wan cautioned that ''a wild fluctuation still looms ahead.''

Energy and crude-related firms as well as power generating entities rose in tandem with the retail oil price increases.

The prices of gasoline and diesel will jump by 1,000 yuan a ton, the National Development and Reform Commission said on its Website on Thursday. On July 1, China will increase industrial and commercial electricity prices by an average 0.025 yuan a kilowatt-hour.

PetroChina, the country's biggest oil company, rose 4.55 percent to 15.86 yuan while China Petroleum & Chemical Corp gained 2.07 percent to 12.83 yuan.

"The rise in energy prices on Thursday suggests that the government is concerned about the energy shortage and the stock market's downside," said Shen Minggao, a Citibank economist. "But this move will likely turn on investors' interest in some sectors they feel will benefit (from the price rise).''

He also cautioned that firms in the manufacturing sector will worry about shrinking profit margins.

Heilongjiang Province-based Huadian Energy Co rose to 3.59 yuan by hitting the 10 percent daily trading cap.

Shanghai Electric Power Co jumped to 4.57 yuan by hitting the daily trading limit.