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BIZCHINA / News |
Surging indices inaugurate Q4 tradingBy Ding Qi (chinadaily.com.cn)
Updated: 2007-10-08 17:05 Mainland stock markets regained their bullish trend Monday after the week long holiday as major indices in Shanghai and Shenzhen exchanges both toppled historical highs with huge daily gains. But the increasing divergence of stock performance could turn investors' attention to looming market risk. The benchmark Shanghai Composite Index opened at a fresh all-time high of 5,683.31 points, over two percent higher than its September 28 close -- a start in line with most expectations due to the recent "holiday effects" in the booming market. After a short break in the morning, the index edged up further and hit the day's highest of 5,729.96 points at around 2pm. Although a minor correction driven by profit taking funds dragged the index below the 5,700-point level in the final hour of trading, it still gained an overall 2.53 percent and closed at 5,692.75 points. The Shenzhen Component Index ended the day at 19,232.35 points, 1.95 percent higher than the close of last trading day. Turnover of both markets expanded slightly today, reaching 157.8 billion yuan (US$21.01 billion) for Shanghai, and 81.6 billion yuan for Shenzhen. The financial sector was overwhelmingly today's top gainer. Industrial and Commercial Bank of China, the nation's largest bank, led today's gains with an unusual 10-percent gain and closed at 7.27 yuan per share. CITIC securities, China's first listed broker, rose 3.46 percent to close at 100.6 yuan, making it the first 100-yuan broker share. Shares of China Minsheng Banking Corporation gained over three percent today after announcing it plans to buy a 20 percent stake in US-based UCBH Holdings Inc., a major bank focusing on the Chinese community in the US. The deal marks Minsheng's first overseas acquisition. Also notable today, 533 stocks closed higher, 161 flat remained flat, while as many as 797 stocks went down surprisingly. This marks a sharp contrast from today's booming indices, suggesting market divergences are growing and risks accumulating. According to data from financial portal Hexun.com, by the end of the morning session, five stocks from the financial sector contributed surprisingly 150 points of the hike of the Shanghai Composite Index due to their super heavy weight. This may explain the difference between the index and the number of deficit stocks. It is fair to say the impressive performances of blue chips with large capitalization, or figuratively speaking "the huge dancing elephant," suggests that there is still ample liquidity flowing into the stock market and investors' enthusiasm is not fading. However, according to some market watchers, investors have to remain cautious in spite of the booming index and stick to their own stock valuation methods. |
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