By Ding Qi (chinadaily.com.cn)
Updated: 2008-03-20 16:31

Investors in China experienced a roller coaster drive Thursday as most stocks rebounded sharply from dreadful morning losses and pushed the Shanghai index up over 3,800 points.

Following the overnight losses on Wall Street and European markets, the benchmark Shanghai Composite Index opened 40 points lower at 3,721.50. Heavyweight PetroChina pushed the index to fall to the day's lowest point at 3,516.33 around 10:30 am, the lowest since June 5 last year.

Strong bargain hunting forces took control for the rest of the trading day and managed to reverse the sliding trend of notably discounted stocks. The index climbed over 200 points in the afternoon and closed at 3,804.05 points, up 42 points or 1.13 percent over Wednesday's close.

Shanghai Compositie Index  Source: Sina.com.cn

The Shenzhen Component Index bounced even higher by 3.87 percent to 13,548.61 by the end of trading. The CSI 300 index, covering major stocks in both markets, also gained 2.9 percent to 4,001.83.

The combined turnover of the two markets expanded to 160.6 billion (US$22.68 billion), as more than 1,300 stocks gained versus only 76 losers. In particular, some 60 stocks surged to the daily limit of 10 percent.

Most blue chips edged up. Air China led the gain with a 10-percent rise today after losing a staggering 50 percent in the past three months. Baoshan Iron & Steel also climbed 7.12 percent to 14.14 yuan as its parent company just received regulatory approval to merge two smaller steel groups in Guangdong Province.

Echoing lusterless financial results, PetroChina declined 3 percent today. The oil giant reported last night that its 2007 net profit grew a modest 2.4 percent to 145.625 billion yuan. It also forecast a weak result in refining operations for the first quarter due to a wide price gap between the crude oil and refined products. The news triggered panic selling of its shares in the morning session and dragged down the Shanghai index.

According to a notice jointly issued by the Ministry of Finance and State Administration of Taxation, mutual fund companies will get a temporary tax exemption in their stock investment income. In addition, investor gains from mutual fund dividends as well as fund managers' income from mutual fund trading are also now exempted from taxes. The preferential policies are aimed at promoting China's stock funds and will boost the weak market.