By Li Zengxin

Following yesterday's robust growth, Chinese stocks slowed down the pace on an upward trend today. The Shanghai Composite Index closed at 3,913.14, up 22.33 points or 0.57 percent from yesterday's closing.

Opening higher from 3,900.03, the index dived first then turned around and stumbled to the highest 3,935.79 near the closing of the day. Of the many slides, the deepest was seen at the mid-morning session, when the benchmark index dropped to the lowest 3,852.05. From then on, plunges were never deeper than the gains, driving the index up to the closing level.

Shanghai Composite Index
Source: www.stockstar.com

Total turnover of the stocks enclosed by the major indices was 274.3 billion yuan, slightly higher than that of yesterday.

At the Shanghai bourse, 551 stocks saw their prices rise, 215 fell and 73 ended flat. Beihai Gofar Marine Biological Industry rose 10.07 percent to 7.87 yuan as the top gainer. Cosun and Hunan Changfeng Motors were also sealed at the maximum rising cap of 10 percent. Jiangsu Jiangnan High Polymer Fiber, however, dropped 5.09 percent as the biggest loser.

China Unicom, with the largest trading volume, dropped 0.03 yuan, and Chalco, with the largest transaction value, added 0.69 yuan to its share price.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, closed at 12,850.69, up 154.68 points or 1.22 percent. It went through the day within a range from 12,580.43 to 12,930.19.

Shenzhen Component Index
Source: www.stockstar.com

Of its A shares, 363 went up, 166 down and 82 unchanged. Dalian International was on top of the gainer's list, while (SST) Gansu Languang Science and Technology fell most. TCL with the largest trading volume went up, while China Vanke with the largest transaction value slipped.

Stocks in the construction and pharmaceutical industries continued their bull run. Zhejiang Hangxiao Steel Structure climbed 10.01 percent up to pioneer the construction sector. Textile and timber shares also performed well.

B shares ended mixed. Of the 109 B shares listed on the two exchanges, 74 rose and 11 ended flat. Hainan Pearl River Holdings was again sealed at the maximum cap of 10 percent and rose to 5.03 yuan. Closed-end funds listed on the exchanges were also strong.

After horizontal adjustments and a strong surge in the past two days, the stock market has started recovering from the losses in the previous week. At yesterday's closing, the total market value of all securities listed on the two exchanges was 16,844.7 billion yuan, up 1,051.4 billion yuan or 6.7 percent from that of Monday, when the stock indices had the biggest single-day drops in absolute amounts and hit the lowest points during the day after the stamp tax hike on May 29.

However, the market value was still 2,178.8 billion yuan down from that of May 29, a level where the Shanghai Composite Index was above 4,300 points. As many analysts believe there were bubbles at that level, the gap is not expected to close up very soon.

Recovering of the market has also resulted in an increase in the number of new stock accounts. The new A-share account opening on June 6 was 205,901, up from the lowest amount of 162,190 on Tuesday. Total account opening was 226,208 at the two stock exchanges, including 3,111 B-share accounts. New mutual fund accounts, however, dropped to 17,196, according to China Depository and Clearing Co Ltd.

By Wednesday, there had been 102,918,800 investment accounts in the two bourses, including 89,024,100 A-share, 2,188,900 B-share and 11,705,800 fund accounts.

China is preparing for a growth enterprise board, according to Wang Shouren, vice chairman and secretary-general of Shenzhen Venture Capital Association. Wang said that preparation of a China-featured growth enterprise market is making substantial progress and is soliciting views from the industry.

The growth enterprise board will not be transformed from the current small- and medium-sized enterprise board in the Shenzhen Stock Exchange by lowering the threshold. The board will be a completely new one with a long-term development prospect.

Wang suggested the a company to be listed on the board should have a share base of no less than 30 million yuan, realized profits in three consecutive years, and have accumulated sales revenue of no less than 100 million yuan for the past three years, sales of no less than 50 million yuan in the previous year, accumulated profits of no less than 10 million yuan for the last three years and profit of no less than 5 million yuan for the last one year.

On the other hand, improved legislation and enhanced supervision are needed to combat illegal trading activities in the existing markets, said analysts. In the nine trading days from May 24 to June 5, there were 13 senior mangers, including directors, supervisor and mangers of 11 companies reported to have impropriated company funds for stock investment.

"The current law only stipulates that the nation confiscate all the surplus or 'extra earnings' from the illegal equity investment by management, using company capital," said a senior manger of a public company. Such a punishment is not severe enough to deter the crimes. The disproportionate cost-benefit ratio in effect "encourages" people with access to public funds to have a shot. "As a result, what we hear might be a tip of the iceberg. There might be an enormous number of such incidents unknown yet," said the manager.

(chinadaily.com.cn)