1970-01-01 08:33:27
CHINESE mainland key stock index rose to a record, having taken less than two weeks to rebound from a rout that erased more than $400 billion of market value.
China Merchants Bank Co and property developer China Vanke Ltd paced gains after policy makers held off from raising borrowing costs to cool the stock market and the economy. Premier Wen Jiabao last week said monetary policy needs ``moderate tightening,'' after official reports showed inflation accelerated to a two-year high and money-supply growth stayed above the central bank's target for a fourth straight month.
The Shanghai Composite Index, which tracks the bigger of domestic stock exchanges, gained 2.95 percent to 4,254.865. The Shenzhen Component Index, which covers the smaller one, rose 3.11 percent to 14,122.732.
``Investors keep buying shares as a rumored clampdown involving measures such as interest-rate increases failed to materialize over the weekend,'' said Chen Shide, who manages the equivalent of US$212 million at GF Fund Management Co in Guangzhou. ``It can't be ruled out that the government will still take action.''
Investor interest has waned little since stamp duty was tripled to 0.3 percent. About 250,000 new securities accounts were opened daily last week, compared with the quarter's average of some 300,000, official figures show.
Merchants Bank jumped 1.92 yuan (25 US cents), or 8.7 percent, to 24.12 yuan. Industrial & Commercial Bank of China Ltd, the nation's No. 1 lender, rose 0.12 yuan, or 2.3 percent, to 5.27 yuan. Bank of China Ltd, the second biggest, added 0.11 yuan, or 2.1 percent, to 5.40 yuan.
China Vanke Ltd., the country's largest listed developer, climbed 0.20 yuan, or 1.1 percent, to 19.30 yuan. Gemdale Corp, a Chinese developer that partnered with ING Groep NV, rose 1.19 yuan, or 3.6 percent, to 34 yuan. Shanghai Lujiazui Finance & Trade Zone Development Co, a developer in Shanghai's financial district, gained 0.64 yuan, or 2.2 percent, to 29.65 yuan.
Bank savings rates that trail inflation are helping steer funds in to stocks.
Household yuan deposits fell by 278.4 billion yuan in May, after sliding in April for the first time since February 2003. Commercial banks' deposit rates are capped at the central bank's one-year deposit rate of 3.06 percent, less than the 3.4 percent inflation rate.
The People's Bank of China has raised interest rates twice this year to rein in industrial expansion and tame inflation, with both announcements made over weekends. It's also ordered commercial banks five times to set aside more money as reserves to rein in lending.
``The government didn't raise interest rates over the weekend and that's bolstering sentiment,'' said Yao Maogong, head trader at Shanghai Securities Co.
Sichuan Changhong Electric Co, China's second-biggest television maker, surged by the daily limit after it announced Microsoft Corp has agreed to buy 15 million new shares for 94 million yuan, or 6.27 yuan each. The shares rose 0.99 yuan to 10.92 yuan.
Shanghai Daily News