Fueled by a large inflow of investment funds, the Shanghai stock market surged for the seventh consecutive day, sending the key indicator up 1.33 percent yesterday to a record high of 3,444.29.
It was the first time the index has crossed the 3,400-point barrier.
The Shanghai Composite Index, the most widely watched indicator of the mainland stock market, rose 45 points, with 407 stocks out of the 912 closing higher. Turnover on the Shanghai Stock Exchange amounted to 152.9 billion yuan, also hitting an all-time high, from 139.95 billion yuan the day before.
Stocks in the non-ferrous metals sector took the biggest jump. Jiaozuo Wanfang Aluminum and Yunnan Aluminum surged to their daily allowable limits to close at 17.2 yuan and 20.3 yuan, respectively. Jiangxi Copper increased 8.9 percent to close at 23.5 yuan. "It is mainly because of the rising price of non-ferrous metals in the international commodity market, and the concept of asset injection in some State-owned metal companies," said Wu Jianxiong, an analyst at Guotai Jun'an Securities.
Companies in the financial sector performed well. Industrial Bank Ltd, which posted a 54 percent increase in net profit in 2006, surged 5.6 percent to close at 31.5 yuan. Bank of China rose 3.7 percent to close at 5.88 yuan, while Ping An of China climbed 2.3 percent to close at 52.8 yuan.
Analysts said the stock market performance, led by large-capitalization financial stocks, is expected to remain stable in the next few weeks before the introduction of index futures gives the market a jolt.
"The performance of large-capitalization financial stocks will continue to act as an adjustor to avoid large-scale volatility in the stock market before the launch of index futures," said Wu.
"The largely increasing liquidity continues to drive the rally," said Liu Jun, an analyst at Orient Securities. "But we are still worried about the surging stocks' price-to-earnings ratios, which will possibly result in market volatility," he said.
Companies in the steel sector also performed well yesterday, encouraged by the good first-quarter result from Baoshan Iron and Steel. Anyang Iron and Steel surged to its daily limit to close at 6.55 yuan.
(China Daily April 11, 2007)