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Stocks rise for 6th day, regain 4,000-point foothold

By Li Zengxin (chinadaily.com.cn)
Updated: 2007-06-12 15:54

The stock market has been recovering from the loss for six consecutive days including today. Total market value of all securities listed on the two exchanges was 17.33 trillion yuan by yesterday's closing, close to the figure on May 30, the day following the stamp tax hike when the stocks plunged 6.5 percent.

But the number of new accounts opened last week lagged behind the trend and kept shrinking. For the whole week except Wednesday, new investment accounts on the two exchanges were below the 200,000 mark.

New account opening
Source: China Depository and Clearing Co Ltd

Date	A Share	B Share	Fund	Total
2007-06-04	197,324	2,656	40,505	240,485
2007-06-05	162,190	2,396	24,470	189,056
2007-06-06	205,901	3,111	17,196	226,208
2007-06-07	180,404	2,747	27,678	210,829
2007-06-08	194,678	2,699	22,221	219,598

By June 8, there were 103.3 million investment accounts in the Chinese mainland, including 89.4 million A-share, 2.2 million B-share and 11.7 million fund accounts.

Now that the statistics for May have been released, many began to fear the central bank may issue tightening measures under the apparent excessive liquidity problem. Analysts believe if the People's Bank of China raises the interest rates or bank reserve ratio again, the stock market is for sure to be affected, but not as much as the stamp tax hike has done, as an interest rate change is not merely targeting the stock market.

NBS said today that the consumer price index (CPI) was up 3.4 percent year-on-year in May. Urban CPI rose 3.1 percent, while rural CIP rose 3.9 percent; food price rose 8.3 percent abd non-edible goods were up 1 percent; consumables were up 3.9 percent while services were 1.7 percent more expensive.

Compared with April, CPI in May was up 0.3 percent. The average CPI for the first five months of this year climbed 2.9 percent over the same period last year.

Food price, the heaviest-weighted component in CPI, rose 8.3 percent last Month. Of its constituents, egg price had the largest growth rate of 37.1 percent, followed by meat and poultry with a 26.5 percent increase.

In addition to a rising CPI, China's trade surplus in May reached US$22.45 billion, up US$5.47 billion than that of April and slightly lower than the US$23.76 billion in February, the largest to date this year. For the first five months this year, the total trade surplus had accumulated to US$85.72 billion, close to that of the whole 2006.

The resurgence of trade surplus, brings the excessive liquidity problem to the spotlight. The central bank is mostly likely to hike required bank reserve ratios, said analysts.