Domestic stocks climbed in the morning session today, shrugging
off a reserve ratio increase at banks on the weekend that was
intended to tighten monetary policy and cool the economy.
The Shanghai Composite Index, which tracks yuan-denominated A
shares and hard-currency B shares, added 1.16 percent, or 59.28
points, to 5,151.04 at 11:30am today.
Gainers in the Shanghai market outnumbered losers 691 to 74
while 80 were unchanged.
The Shenzhen Composite Index, which covers the smaller mainland
stock market, climbed 1.63 percent, or 21.43 points, to
1,339.99.
Airlines enjoyed a broad rally this morning thanks to a rising
currency.
Air China, the world's biggest airline by market value, jumped
7.47 percent, or 1.80 yuan (24 US cents), to 25.90 yuan while China
Eastern, the nation's third-largest carrier, added 8.32 percent, or
1.44 yuan, to 18.75 yuan. China Southern, the nation's biggest
carrier, climbed 5.62 percent, or 1.46 yuan, to finish the session
at 27.436 yuan.
The yuan rose 0.15 percent to 7.3920 per US dollar as of 10:40am
this morning in Shanghai. It was at 7.4030 on Friday, according to
the China Foreign Exchange Trade System.
United States Treasury Secretary Henry Paulson will make a visit
to China this week. He's likely to keep up the pressure on the
central government to allow the yuan to appreciate faster.
The airlines also rose on speculation lower crude oil prices
will reduce costs.
Oil for January delivery was recently at US$87.80 a barrel in
after-hours trading on the New York Mercantile Exchange after
dropping 2.2 percent to US$88.28 on Friday. Jet fuel accounted for
about 40 percent of Chinese airlines' costs in 2006, according to
Beijing-based China Securities Co.
Aluminum Corporation of China Ltd, the nation's biggest maker of
the lightweight metal, gained 7.36 percent, or 2.76 yuan, to 40.24
yuan while Baotou Aluminum Co surged the daily cap of 10 percent,
or 4.93 yuan, to 54.22 yuan.
The two companies enjoyed the rally after the securities
regulator "conditionally approved'' Aluminum Corp's merger with
Baotou.
Aluminum Corp, also known as Chalco will make an announcement
when it receives the official approval document, it said in a
statement to the Hong Kong stock exchange on Friday.
In August, Baotou Aluminum's shareholders agreed to the company
being taken over by Chalco in return for payment of 14.7 billion
yuan in stock. The takeover will increase Chalco's capacity amid
soaring demand in China, the world's biggest consumer and producer
of aluminum.
Banks suffered wide losses this morning after the central bank
asked banks to freeze the amount of money available for lending at
its highest level for two decades to slow down the sizzling
economy.
Shanghai Pudong Development Bank, the Chinese partner of
Citigroup Inc, slid 2.55 percent, or 1.42 yuan, to 54.18 yuan while
China Minsheng Banking Corp, the nation's first privately owned
bank, lost 1.60 percent, or 0.25 yuan, to finish the morning
session at 15.40 yuan.
Lenders must put aside 14.5 percent of deposits as reserves,
starting December 25, up from the previous 13.5 percent, the
People's Bank of China said on Saturday on its Website. The ratio
is the highest since at least 1987 when data began. The increase is
twice as much as nine other reserve hikes made earlier this
year.
(Shanghai Daily December 10, 2007)
