China's shares recovered to finish slightly up yesterday, helped by gains in auto and steel stocks, which have been investors' favorites this year due to the nation's booming car and construction sectors, brokers said.
The benchmark Shanghai composite index, grouping hard currency B shares for foreign investors and yuan-denominated A shares, closed 0.27 percent higher at 1,529.491 points, while the Shenzhen sub-index also edged up 16.47 points, or 0.48 percent to close at 3,412.39.
Auto and steel featured among the 10 most active counters. Index heavyweight Shanghai Automotive's A shares ended up 2.25 percent at 13.18 yuan. They have doubled since the beginning of 2003.
Baoshan Iron and Steel closed 0.55 percent higher at 5.51 yuan, having risen 34 percent this year.
The market rose 3 percent in early July as investors bought into potential targets under a landmark Qualified Foreign Institutional Investors (QFII) scheme, which lets foreigners into the main US$500 billion stock and debt markets.
US financial giant Citigroup Inc became on Tuesday the second foreign name to invest in China's main stock and debt markets, following last week's maiden investment by Swiss banking group UBS AG, a bank executive said yesterday.
Still, analysts said they saw limited potential for further gains in the near term.
"Investors are cautious because of the ongoing interim reporting season," said analyst Di Bin at Merchants Securities.
The Shanghai composite index should move narrowly, with resistance at 1,550 and support at 1,500, analysts said.
More than 1,200 listed firms are required to post results from now to August 31, though most will report in August.
Companies expected to post disappointing first-half results plunged yesterday to buck the market rise.
In the foreign exchanges market, China's yuan closed one notch firmer against the US dollar at 8.2770 yesterday, sticking to the higher end of its managed trading band.
US Federal Reserve Chairman Alan Greenspan said on Tuesday that it would be beneficial for China to alter the yuan's exchange rate if it was undervalued relative to the dollar.
The yuan was sandwiched between 8.2768 and 8.2771 throughout the session, near the firmer end of a razor-thin band of 8.2760 to 8.2800 that the central bank usually enforces. Turnovers rose to US$790 million from US$610 million a day earlier.
But dealers shrugged off Greenspan's comments, saying they did not expect any changes in the short run with a stable exchange rate system long considered a base for growth and social stability.
"The enforced trading band may be expanded a little in the future, but when and how big such a change will be depends ultimately on the central government," said a Beijing-based bank dealer.
The yuan is not freely convertible on the capital account and its movements within the government-set range are decided mostly by trade and foreign investment.
In the futures market, Shanghai copper futures ended virtually flat yesterday during slack trading, as the market waited to see if the London Metal Exchange would fall further despite positive remarks by Greenspan, traders said.
The most active November 2003 contract ended 10 yuan higher at 17,700 yuan (US$2,137) per tonne. Other contracts ended from 20 yuan higher to 20 yuan lower with combined volume falling to a thin 50,830 lots from Tuesday's active 149,920 lots.
LME three-month copper ended Tuesday's curb US$9 lower at US$1,736, and was quoted at US$1,734/1,737 in yesterday's Asian trade as US equities markets softened even after Greenspan signalled he was ready to keep interest rates low for a "considerable" period of time.
(China Daily July 17, 2003)
