Investors breathe once again as city market bounces back

By Lydia Chen and Zhu Shenshen  |   2008-6-26  |     NEWSPAPER EDITION

SHANGHAI'S key stock index climbed yesterday with the benchmark index posting its first back-to-back gains since June 3 on speculation the slump that erased US$1.2 trillion in market value had been overdone.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, climbed 3.64 percent, or 101.99 points, to 2,905.01.

Gainers in the Shanghai market outnumbered losers 794 to five while one was unchanged.

The trade volume was 67.5 billion yuan (US$9.78 billion) compared with 49.9 billion yuan in the previous session.

"The increased trade volume represented the market confidence in recovery and many shares are now valuable after the slump," said Wan Bing, GF Securities' analyst.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was up 4.77 percent, or 38.20 points, to 839.70.

Banks as well as developers led the market higher.

Stocks also climbed after the China Securities Journal said China Life Insurance Co has been investing "large sums" in mutual funds.

Industrial and Commercial Bank of China, the country's biggest lender, gained 1.54 percent to 5.28 yuan (77 US cents). Huaxia Bank jumped 4 percent to 10.40 yuan.

Shanghai-based Shimao Property Co surged the daily cap of 10 percent to close at 10.01 yuan. Poly Real Estate Co, the second-biggest developer by market value, added 5.69 percent to 14.67 yuan. It climbed 9.98 percent yesterday. China Vanke, the nation's biggest developer, gained 3.53 percent to 9.68 yuan.

Air China, the largest carrier by market value, increased 6.75 percent to 8.70 yuan.

Air China Ltd will work with Taiwan's two biggest airlines when it begins weekend flights to the island next month. The carrier has signed deals with China Airlines and EVA Airways Corp covering maintenance, refueling and other operations.

"The market may rebound in July as the Olympics and better-than-expected half-year reports arrive," said Ling Xuewen, Wlstock's analyst.

On the down side of trading, Jinzhou Port Co dived 9.97 percent to 8.13 yuan. The company said yesterday it plans to sell 1.9 billion yuan of shares to PDA Corp, parent of Hong Kong-listed Dalian Port (PDA) Co.