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China's shares closed slightly higher yesterday, helped by strong gains in hotelier Jinjiang Tower and stationery maker Daying Modern Agricultural, brokers said.
Shanghai's benchmark composite index rose 8.547 points to 1,538.762, while Shenzhen's sub-index climbed 19.64 points to 3,347.61.
Shanghai's B-share index tiptoed 0.64 percent higher to 115.255 points, while Shenzhen's nudged up 0.90 percent to 217.30. Hard currency B shares are open to Chinese and foreign investors.
Jinjiang's B shares closed 4.37 percent higher at US$0.525 on news that its parent Jinjiang (Group) Holding Co would merge with New Asia (Group) to create a tourism services behemoth.
More than 1.4 million Jinjiang B shares changed hands. Its yuan-denominated A shares shot up almost 10 percent - their daily limit - to 10.35 yuan (US$1.24).
"Jinjiang shares fell back slightly from the morning close, but still did very well because investors feel the combined group will achieve better results," said analyst Shao Rui of Shanghai Securities.
The stock had fallen more than 18 percent since mid-April as Jinjiang, which runs the historic Peace and Park hotels, was forced to shut several hotels because of low occupancy due to the outbreak of SARS.
Daying's B shares rose 3.07 percent to US$0.47 on bargain hunting. The stock had fallen more than 15 percent over the past week because of the firm's links to property magnate Zhou Zhengyi, now at the center of an investigation into corporate irregularities.
Its B shares were the third-most heavily traded, with about 1.2 million changing hands. Daying's A shares also climbed, rising 6.4 percent to 9.47 yuan (US$1.14).
Analysts said sentiment was hurt somewhat by May industrial output, which grew at its slowest pace in nine months.
"The slow output growth is a concern, especially in the coming months," said an analyst at Shenyin & Wanguo Securities.
Industrial output rose 13.7 percent year-on-year in May, lower than the 14.9 percent year-on-year for April and the slowest pace since August, when it grew 12.7 percent, the State Statistical Bureau said in a statement.
On the foreign exchange market, China's yuan closed firmer against the dollar at an intraday high of 8.2768 yesterday, buoyed by ample dollar supply on the market, dealers said.
The yuan touched an intraday low of 8.2770, moving near the strong end of the tiny range of 8.2760 to 8.2800, which the People's Bank of China enforces. Turnover, a meagre US$310 million on Monday, was not immediately available.
"Persistent dollar oversupply kept the yuan at high levels today," said a domestic bank dealer.
The yuan has moved around 8.2770 for about two years, helped by healthy trade surpluses which ensured a steady inflow of dollars to the Shanghai-based forex market.
Dallas Federal Reserve President Robert McTeer said last week China may be forced to reconsider its dollar peg as its importance in global trade grows.
His remark triggered renewed speculation of revaluation and options traders started bidding up volatilities - which measure expectations of future currency movements - on the yuan in overseas markets.
A recent Reuters poll of 10 economists showed most did not expect a change in the yuan's range this year.
While adjustments of its peg to the dollar are possible, they expect the currency to remain pegged at some level for six more years on average.
The yuan weakened to 7.0045 per 100 Japanese yen from Monday's 6.9905 and softened against the euro to 9.6999 from 9.6694.
It strengthened against the Hong Kong dollar to close at 1.0610.
(China Daily June 11, 2003)
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