Chinese shares rise to five-year high
(AP/Reuters)Updated: 2006-11-20 16:45
 A stock investor monitors the changes of stock and fund indexes at a securities trading office in Beijing November 20, 2006. The Shanghai stock index rose as high as 2,000 points, a 63-month high. [newsphoto]  |
Chinese shares rose to another five-year high on Monday, with a stronger currency boosting banks and a slump in crude prices driving up heavyweight refiner Sinopec.
The benchmark Shanghai Composite Index tipped upward 2.3 percent to 2,017.28, its highest closing level since July 27, 2001, when shares ended at 2,065.72. It was the fifth consecutive session of gains in the index.
The index will likely stay near the psychologically important 2,000 level over the near term because of strong liquidity in the market, said Qian Qimin, an analyst at Shenyin & Wanguo Securities.
"Growing confidence in China's economy pushed banking stocks up again today, and consequently the broad market," said Zheng Weigang, senior analyst at Shanghai Securities.
The Shenzhen Composite Index edged up 0.5 percent to 455.39 in trading on China's second exchange.
Banks extended their recent gains on hopes the yuan will continue to appreciate, thereby increasing the value of their yuan-denominated assets, analysts said.
At 0722 GMT, the US dollar was at 7.8682 yuan on the over-the-counter market, down from Friday's OTC close of 7.8718 yuan. The Chinese unit has risen about 5.2 percent against the dollar since July 2005, including the revaluation that month.
China Merchants Bank, which gained 1.1 percent on Friday, jumped 6.6 percent to 13.50 yuan. Industrial & Commercial Bank of China advanced 3.2 percent to 3.92 yuan after adding 9.8 percent last week.
China Petroleum & Chemical, the country's largest refiner by capacity known as Sinopec, surged 7.8 percent to 7.87 yuan following front-month Nymex crude's fall to a 17-month low at Friday's close.
Some airlines were also helped by lower crude prices, with Air China rising 6 percent to 4.78 yuan, and China Southern Airlines up 3.2 percent at 3.93 yuan.
The index's all-time high is 2,245.435 points, hit in June 2001, and many investors now believe that may be surpassed in the next few months.
The domestic listings of a series of China's biggest companies this year ICBC, have fuelled interest in the market, while regulatory and structural reforms -- particularly the removal of a $250 billion overhang of non-traded shares held by the state -- have increased investor confidence.
This year, China has quickened the pace at which it allows foreign money into
the stock market under its Qualified Foreign Institutional Investor programme. Last week, it gave fresh
foreign exchange quotas totalling $400 million to three foreign firms, bringing the overall quota
to $8.645 billion.
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