Index gains at midday on government assurance

By Lydia Chen  |   2008-7-2  |     ONLINE EDITION

SHANGHAI'S key stock index increased in the morning session today after the state news agency assured investors that the country's stock market will be "stable and healthy."

The Shanghai Composite Index gained 1.58 percent, or 41.82 points, to 2,693.42 at 11:30am.

Losers in the Shanghai market outnumbered gainers 767 to 43 while seven were unchanged.

The index has dropped 49.7 percent this year as of yesterday's close, making it the worst-performing stock market in the world.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was up 2 percent, or 15.52 points, to 792.19.

PetroChina, the biggest heavy weight and the country's largest oil producer, contributed to the market rise this morning as it jumped 1.45 percent to 14.68 yuan (US$2.14). Sinopec, the country's largest oil refiner, added 1.85 percent to 9.92 yuan in the early session.

A healthy market shouldn't be "overly dependent'' on short-term policies, Xinhua news Agency said yesterday, indicating last year's stock boom and the recent slump were "irrational." China's economic situation is "better" than expected even though growth may slow, Xinhua said, without elaborating.

The regulator has enforced a set of measures to show that they are dedicated to creating a good environment for the stock market's development, it said, referring to the enhancement of listed company supervisions and investor protections.

Investors should be "clear-headed'' and realize that stock markets have ups and downs and that is the way the market works, just like the laws of nature, it added.

Gansu Jiu Steel Group Hongxing Iron & Steel Co climbed 4.69 percent to 9.38 yuan this morning.