Chinese stock markets closed higher on Friday, a day that marked
the seventh anniversary of the beginning of the last bull market
cycle from 1999 to 2001.
The gains came after three volatile trading days triggered by
falling prices of commodities on the international market and falls
of stock markets in neighboring countries.
The Composite Stock Index on the Shanghai Stock Exchange, which
comprises yuan-denominated A shares and foreign-currency B shares,
closed at 1,659.55 points, up 42 points, or 2.61 percent with
turnover totaled 41.6 billion yuan (US$5.2 billion). It opened
Friday's trading at 1,620.21 points.
The index hit 2,245 in 2001, a record high in the 16 years of
stock markets in new China, followed by five year bear markets
until late 2005, although the country's economy has been growing at
about 10 percent annually since 1978.
The major index of Shenzhen Stock Exchange, the Shenzhen
Component Index, was up 73.33 points, or 1.71 percent to close at
4,369.40 points on Friday, with a total turnover of 23.7 billion
yuan.
The share prices of bellwethers Sinopec and G Baosteel rose by 4
percent, which helped stabilize the markets with improved market
sentiment and pushed up the major indices.
Wan Bing, an analyst with Guangfa Securities Co., said the
downward trend triggered by negative factors at home and abroad is
coming to an end.
The Chinese stock markets rose to their highest points in more
than 18 months earlier this week with the Shanghai Composite Stock
Index at 1,678 points on Tuesday.
The index was 998 points on June 6, 2005 and it has jumped by
about 60 percent since then.
Analysts said the markets would be fluctuating in the short run
and are likely go up as the markets are now at the beginning of
another bull market cycle.
Prices of about 100 shares, out of the country's 1,370
domestically listed firms, have doubled in the past nine months,
with prices of several commodity shares up three to seven
times.
China is expected to resume initial public offerings (IPOs) in
the near future as similar legal framework for IPOs was put in
place on Thursday.
China suspended IPOs a year ago for the ongoing State share
reform to overhaul the capital market.
Poor corporate governance and the country's flawed legal
framework for capital market, irregularities by listed firms and
controlling share holders and loose supervision have been blamed
for the bear market.
After over a year's efforts, China has improved its Securities
Law and Corporate Law and launched an unprecedented state share
reform to make the dominant non-tradable State shares, about two
thirds of the total, tradable to bring the system in line with
international practices.
Qin Hong, an analyst with Jiangsu Tianding Securities Co., said
that the coming IPOs will bring quality firms with attractive
values to the Chinese markets step by step, adding new blood to
expand the scale and improve the value of the markets, which should
be viewed as favorable factors in the long run.
(Xinhua News Agency May 20, 2006)