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Stocks rebound as healthy earnings reports trickle in, 04/20

(chinadaily.com.cn/Shanghai Daily)
Updated: 2007-04-20 16:51

Domestic stocks rebounded from the biggest slide in seven weeks, supported by corporate earnings, as some investors judged Thursday's slump excessive.

TheShanghaiComposite Index, which tracks the bigger of domestic stock exchanges, climbed 3.92 percent to 3,584.20 at the close. It tumbled 4.52 percent yesterday on concern rapid growth will prompt the government to raise interest rates. The Shenzhen Composite Index, which covers the smaller one, added 43.85 to 1,003.87.

"The rate concern is still there. But I think the market over-reacted to it," said Fan Dizhao, who helps manage about US$1.8 billion at Guotai Asset Management Co in Shanghai."Corporate earnings are very strong and growing fast and that will keep driving up share prices in the long term."

Power producers and consumer stocks climbed today after GD Power Development Co and Tsingtao Brewery Co reported higher earnings, according to Bloomberg.

GD Power, the Shanghai-listed unit of one of China's five largest electricity producers, rose 0.33 yuan, or 2.4 percent, to 14.09 yuan. The company said first-quarter profit rose 52 percent to 289.9 million yuan (US$37.5 million) on higher power output.

China's government raised power prices in June for the first time in more than a year, helping producers pass on higher raw material costs.

Other power stocks also advanced. Huaneng Power International Inc, the listed unit of China's largest power group, climbed 0.43 yuan, or 3.6 percent, to 12.25 yuan. China Yangtze Power Co, owner of the world's biggest hydropower project, gained 0.33 yuan, or 2.5 percent, to 13.37 yuan.

The benchmark Composite Index on theShanghai Stock Exchangeclosed at 3,584.20 points at 15:00 on Friday, up 3.92 percent from the previous close.

Graphical chart of Composite Index on the Shanghai Stock Exchange. [stockstar.com]

The Component Index on theShenzhen Stock Exchangeclosed at 10,258.64 points at 15:00 on Friday, up 4.07 percent from the previous close.

Graphical chart of the Component Index on the Shenzhen Stock Exchange. [stockstar.com]