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The bull run shows no sign of flagging, with the Shanghai Composite Index rising by another 2.2 percent yesterday to close at a record - yet another - high of 4,272.11 as investors' accounts broke through the magic number of 100 million. The index increased 92.33 points, with 711 out of 897 stocks closing higher. The turnover on the bourse totaled 258.11 billion yuan, a new record. Research by international investment bank UBS has revealed the performance of the stock index is highly correlated to the daily new retail equity account openings. "Given both A- and B-share markets are dominated by retail investors now, opening of new accounts appears a good indicator," said UBS analyst Edmond Huang in the report. The number of daily new account has been as high as 30,000 on average of late. The CSI 300 Index, the underlying index for the proposed index futures market, increased 2.19 percent to close at 4,072.58, the first time it crossed the 4,000 barrier. The China Securities Regulatory Commission is reportedly in favor of launching trading in index futures within this year. The smaller Shenzhen Composite Index surged 2.35 percent to close at 1264.05. The B-share index soared 6.51 percent to close at 344.68, the second day it rose after losing nearly 19 percent the previous week. Analysts said the market, experiencing a large funds inflow, may maintain the upward trend in the next few weeks before a correction. Their advise for investors: sell some stocks or buy large-capitalization blue-chip stocks. "The performance of the large-cap stocks in financial, steel and oil refiner sectors has remained relatively more stable in the past several weeks. These companies are expected to post solid profit growth in the next three years," said a report released yesterday by China International Fund Management, a JPMorgan joint venture in China. Shi Hui, vice-president of Zendai Investment Management Co Ltd, said the stocks worth buying now are the financial ones, which have shown the most resistance to market cycles. Companies in electrical power and harbor sectors performed well yesterday. Huadian Power International Corporation Limited soared to its daily limit to close at 10.29 yuan while Shanghai Electric Power Co Ltd soared 5.45 percent to close at 11.42 yuan. Real estate and transportation stocks also performed well. (China Daily May 29, 2007) |
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