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China's shares closed higher yesterday as investors picked up a range of high-technology stocks, betting the end of a prolonged market slump may finally be in sight, brokers said.
Shanghai's hard-currency B-share index climbed 2.98 percent to 129.748 points while Shenzhen's rose 1.58 percent to 206.03.
Turnover in B shares, which are open to foreigners and Chinese, was US$52.6 million in Shanghai, up 3.3 percent, and HK$124 million (US$15.9 million) in Shenzhen, down 39 percent.
Analysts said market sentiment was strengthening and most punters had begun to believe a medium-term rally was on the way.
The benchmark Shanghai composite index, tracking B shares and yuan-denominated A shares, rose 1.76 percent to 1,485.618 points yesterday. It has climbed 9.4 per cent since the start of 2003.
The Shenzhen sub-index closed up 1.57 percent yesterday to 3.010.61 points.
"We had expected most punters to take profits and the market to end down, but actually they continued to buy into shares, showing their confidence has improved to a great extent," said analyst Yu Xiaoli of Haitong Securities.
But the composite index is still down about 35 per cent from its peak in June 2001 because of poor corporate earnings, frequent initial public offerings and several other factors.
Analysts said punters began to favor technology stocks such as Shanghai Broadband Technology Co and No 2 mobile operator China United Telecommunications Corp, a strong performer this week.
Wide-band telecommunications equipment maker Shanghai Broadband was the biggest A-share gainer in Shanghai, surging its 10 per cent daily limit to end the day at 13.53 yuan (US$1.63).
Star performer China Unicom edged up just 0.9 percent to 3.41 yuan (41.2 US cents) after rallying 21.1 per cent over the past two days. It was the most heavily traded A share with 403.7 million shares changing hands.
Shanghai Baosight Software, the only software developer on the B-share markets, was among Shanghai's top B-share gainers with a rise of 4.76 percent to 79.2 US cents.
Punters also began buying into newly listed firms such as Bright Dairy as the market entered the annual corporate reporting season, analysts said.
"Newly listed firms, particularly those traded since the second half of last year, were considered safe for investors as most of them had posted good third-quarter results," said Great Wall Securities analyst Duan Kai.
Bright Dairy and Food Co, listed since August 28, was among the top A-share gainers in Shanghai, rising 7.68 percent to 12.9 yuan (US$1.56).
Its net profit rose 32 percent year-on-year to 151.7 million yuan (US$18.33 million) in the first nine months of 2002.
China's yuan yesterday closed unchanged at a strong 8.2770 to the US dollar, partly supported by rising demand for the Chinese currency ahead of the lunar new year holidays in February, dealers said.
The yuan was sandwiched in a narrow box of 8.2768 and 8.2771 and turnover was heavy at US$720 million, although that was down from Wednesday's US$890 million.
"We have seen active yuan buying over the past few trading days as Chinese companies need more cash to pay staff bonuses ahead of the Spring Festival," said a domestic bank dealer.
"The demand will help keep the yuan strong before the holiday," he said.
(Xinhua News Agency January 17, 2003)
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