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Market soars on Wen's remarks
http://www.sina.com.cn 2004/09/15 11:00  Shanghai Daily

  Shares in Shanghai rallied yesterday for the biggest single-day gain in terms of percentage change in eight months after Premier Wen Jiaobao reiterated the protection of investors' interest in an executive meeting.

  "It was perceived by investors that the government came to the rescue of the falling stock market," said China Securities Co analyst Lin Xuenong.

  "But the share price gain cannot be sustained, unless market-boosting measures are really put in place, such as the strengthening of the supervision against unethical public companies and brokerage firms."

  The Shanghai Composite Index, which tracks both yuan-denominated A shares and hard-currency B shares, added 3.18 percent to 1,300.36. The gain was the biggest since January 5 when the composite index rose 3.37 percent.

  The A-share Index gained 3.19 percent to 1,364.23 and the B-share Index advanced 2.48 percent to 85.07.

  The Shenzhen Sub-index rose 2.65 percent to 3,077.43.

  While further pledging to limit the size of the fixed-asset investment by curbing loan growth and land supply, the premier stressed the protection of investors' interest and the promotion of the development of the capital market in the executive meeting for the State Council on Monday, reported the official Xinhua news agency.

  Wen also called for immediate implementations of the nine-point guideline, which was issued by the State Council, China's Cabinet, in February to bolster the stock market.

  The items of the guideline included the widening of the capital pipelines for securities companies and the introduction of more derivative products.

  China Petroleum and Chemical Corp, the nation's largest oil refiner also known as Sinopec, rose 4.69 percent to 4.46 yuan (53.73 US cents).

  Baoshan Iron Steel Co, the listed arm of the country's biggest steelmaker, climbed 4.17 percent to 6 yuan.

  The China Securities Regulatory Commission, the stock market regulator, is working on a draft rule that would grant public shareholders more authority over the corporate management of domestically listed firms, according to a report from the China Finance Information Network, a finance Website.

  Public companies would need to secure approval from 50 percent of public shareholders when seeking to sell additional shares or conduct corporate restructuring involving the interest of public shareholders, the report said without citing any source.

  State shareholders control nearly two thirds of the stakes in the 1,200-odd listed firms trading shares on the Shanghai and Shenzhen stock markets. This has led to poor corporate governance, such as the parent companies stealing funds from listed subsidiaries. The part of the stakes controlled by state shareholders are non-tradable.

  Wen's heartening remarks came after the Shanghai benchmark composite index had slumped nearly 27 percent since April amid concerns about the government's cooling measures. China's economy expanded by 9.7 percent during the first half of the year.

  Inflation in China rose to a seven-year high of 5.3 percent last month, led by an increase in grain prices, the National Bureau of Statistics reported on Monday, fueling worries about an interest rate hike.

  "I believe the central bank will not raise the interest rate," said Steven Xu, director of advisory services for China at the Economist Corporate Network, in an interview in Shanghai yesterday. "The central bank is looking at not only the CPI figure but also other indicators, such as the loan growth that is showing signs of slowing."

  M2, China's broader measure of money supply, rose 13.6 percent in August from the year-ago period after growing 15.3 percent the month before, said the National Development and Reform Commission.

  "The central bank will be very cautious about raising interest rates as it will erode the profit margin for listed firms through raising the borrowing cost," said analyst Dai Ming with Fortune Securities Brokerage Co.

  编辑:趴趴


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