Learn Mandarin online - Stock index leaps over 5,000 mark

?  ?

BIZCHINA / Photo

Stock index leaps over 5,000 mark

By Jin Jing (China Daily)
Updated: 2007-08-24 09:03

An investor seems pleased at a brokerage in Nanjing, Jiangsu Province,
after the country's main stock index crossed the 5000 barrier for the
first time yesterday.?[newsphoto]?

The Shanghai stock market jumped 1.05 percent to close at 5032.49
yesterday, breaching the 5,000-point psychological barrier for the first
time.

The Shanghai Composite Index rose 52.41 points, with 524 out of 901
stocks closing higher. Turnover amounted to 153.37 billion yuan ($20.1
billion).

The index has surged a total of 88 percent this year.

The Shenzhen Composite Index rose 1.2 percent to close at 1415.18, and
the foreign-currency denominated B-share index climbed 0.69 percent to
close at 316.46.

According to Orient Securities, non-ferrous metal stocks surged the most
from June, followed by real estate, and mining and quarrying stocks.

Analysts said plentiful liquidity, strong corporate earnings and positive
investor sentiment combined to drive the stock market to a new high.

"Asset revaluation is just beginning, and will continue in the second
half of this year, which is expected to push the market even higher,"
said Zhu Haibin, an analyst at Essence Securities.

"The booming market is sure to continue to absorb big amounts of capital
from family savings," said a report from Orient Securities yesterday.

The percentage of investment assets owned by each household in China is
much lower than in developed countries. Equity investment accounts for
only 9 percent of a family's total assets in China, compared with 22.7
percent in the US and 20 percent in Japan, according to the report.

However, liquidity is expected to reduce in the second half, analysts
said.

"Demand for capital is expected to increase sharply in the next few
months because of the expected large amounts of the IPOs, new-share
offering and corporate bonds," said the report.

"The government may also adopt some administrative measures to control
bank lending, which may trigger a market correction," said Zhu.

"We will invest in low P/E ratio stocks, and companies that directly
benefit from economic growth and currency appreciation in the near
future," said Lin Wenjun, chief analyst at Fullgoal Fund Management Co
Ltd.

?

(For more biz stories, please visit Industry Updates)

Related Stories ?

� More effective regulation urged for stock market
===========================================================================
� Stock market value tops last year's GDP
===========================================================================
� Mainland stock market eyes huge IPOs
===========================================================================
� China to allow more insurance funds into stock market
===========================================================================

Learn Chinese, Chinese School