Bull run driven by banks
By Zhang Ran (China Daily)Updated: 2007-03-30 08:46
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An investor monitors stocks at a securities trading house in Zhengzhou, the capital of Central China's Henan Province. |
After the Shanghai Composite Index hit a mid-day high of 3,273.73 points, a gain of more than 3 percent, it closed around the same level at 3,197.54.
Most stocks fell, however, leaving the financial sector, which climbed by 2.97 percent, to drive up the index.
"The big banks rose on anticipation of a launch of stock index futures, which might occur in May. The banks are the major components of the futures index," Zhang Qi, an analyst with Haitong Securities said.
CITIC China Securities' She Minhua agreed, adding that investors have come back to banking shares for a comparatively conservative and steady strategy after booking profits from speculation on small stocks with low-prices in the last shares boom.
As many as 771 stocks fell yesterday.
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The firm's share price had been rising to its daily ceiling of 10 percent for three days after it announced a buyout by CVC Capital Partners Asia Pacific on Saturday, a leading Asia-Pacific equity fund based in Australia, and a profit increase of 50 percent in 2006.
It's the first time this year that foreign investors will pay a higher-than-market-traded price for a buyout. The private equity fund will pay 1.65 billion yuan, partly borrowed from Citibank and JPMorgan, for a 29 percent controlling stake in the bottle manufacturer, or 8.27 yuan per share 21 percent higher than the closing price of 6.84 yuan before the announcement.
Many other industrial shares also ended weak yesterday, such as Baotou Steel, which dropped 5.11 percent to 5.57 yuan.
(China Daily 03/30/2007 page14)
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