Shanghai's benchmark stock index continued its rally into the new lunar year, closing yesterday for the first time above the 3,000 mark as trading resumed following the weeklong Spring Festival.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, jumped 1.40 percent to 3040.60, the best close since the bourse started trading in 1990.

 

Volume fell to 92.65 billion yuan (US$11.88 billion), compared with 95.98 billion yuan on February 16, the last trading day before the holiday break.

 

"Today's market performance probably reflects similar sentiment recorded on the Hong Kong stock exchange over the past few days," Wu Jianxiong, an analyst at Guotai & Jun'an Securities Co, told Shanghai Daily yesterday. "Just as we expected, banks led the declines and metal companies were the main gainers."

 

Shares of Baoshan Steel, the listed unit of China's biggest steel maker, rose 8 percent, to 10.03 yuan. Angang Steel Co, the fourth-largest, rose eight percent, to 13.83 yuan. And Wuhan Iron & Steel Co, the listed unit of the nation's third-biggest steel maker in terms of output, gained 6.5 percent to close at 9.37 yuan.

 

"Encouraged by the rebound of prices for non-ferrous metals in the global market as well as an expected industrial earnings growth, the performances by companies in the sector were quite satisfactory," said Chen Huiqing, a Huatai Securities analyst.

 

Over the short term, Chen said investors should pay attention to the growth potential of information technology, pharmaceutical, new materials, new energy, commerce and media firms.

 

On the downside, shares of China Merchants Bank, the country's sixth-largest lender, fell 5.6 percent to 16.85 yuan. China Minsheng Banking Corp, the nation's fastest growing bank, dropped 4.1 percent to 12.63 yuan.

 

The Industrial & Commercial Bank of China, the nation's biggest lender, dipped 0.8 percent to 5.1 yuan.

 

The declines in the banking sector were regarded as a natural response to a recent order by the central government that lenders must set aside 10 percent of deposits, up from 9.5 percent. The reserve-ratio increase, the fifth in eight months, was aimed at slowing loan growth and inflation.

 

(Shanghai Daily February 27, 2007)