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Stocks start new year with bang
By Zhang Ran (China Daily)
Updated: 2006-02-07 08:34
Chinese stocks saw an impressive rise on the first trading day of the Lunar
New Year of the Dog, with the Shanghai index headed for its highest point in
almost eleven months.
After a week-long break, the Shanghai Composite Index, which covers
yuan-denominated A shares and foreign-currency B shares, rose 29.58 points, or
2.35 per cent, to 1287.63 points yesterday, the highest since March 14 last
year. The Shenzhen Composite Index, which tracks the smaller market, gained
8.79, or 2.78 per cent, to 315.9.
Commodity shares were a favourite of the market due to their rising prices.
Jiangxi Copper Co, China's largest producer of the metal, led the gain following
copper futures rising to a record in Shanghai. The firm's shares jumped 0.64
yuan (7.9 US cents), or 9.3 per cent, to 7.52 yuan (92.8 US cents), on course
for the biggest gain since January 5, 2004.
Shares in Yunnan Copper Industry Co, the nation's third-largest smelter of
the metal, advanced 6.8 per cent to 6 yuan (74 US cents).
"It was because the price of metal is rising," said Wang Qianming, nonferrous
metal analyst with CITIC Securities. "The world market has a great need for
nonferrous metals such as copper and zinc."
Another reason for the price of the metal to rise, Wang said, was due to
looser money policies around the globe. "Global capitals have been buying in
commodities and energy products such as metal, gold, oil and agricultural
products, as well as real estate."
Wang believed that prices of nonferrous metals will continue to rise over the
next two years.
Most institutional investors and securities analysts like Wang predicted the
Shanghai Composite Index will exceed 1,300 points in 2006 due to share reforms
and other favourable institutional changes in the country's capital market.
China is considering allowing the use of credit to buy and sell stocks, the
official Securities Times reported yesterday, citing a document from the State
Council.
"Launching trading on credit at the proper time will allow more funds to flow
into the markets legally," the paper said. It did not give further details.
China's securities regulator is pursuing a number of measures to try to boost
the stock market, including introducing derivative products and other financial
instruments.
However, experts have warned public investors to pay attention to listed
companies' recent performances as their 2005 financial reports are coming out.
Shares in Chihong Zinc & Germanium Co, a zinc producer in Yunnan, jumped
1.50 yuan (18.5 US cents), or 7.9 per cent after the company said its 2005
profit probably doubled from 2004.
But nearly 200 listed companies have predicted a loss in 2005, which is
likely to dent public confidence in the market.
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