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Stocks reach new high after deep slide

By Li Zengxin (chinadaily.com.cn)
Updated: 2007-05-23 13:50

Chinese stocks slid deeply soon after a higher opening this morning, but bounced back to a new record high by noon.

The Shanghai Composite Index opened from 4,125.43 but dived to touch the lowest morning section point of 4093.92 within half an hour. Then it met strong support to turn around and close at 4145.16, up 34.78 point or 0.85 percent, a new record high.

The Shenzhen Component Index opened also higher, and ended 1.58 percent up at 12,604.29. Of its A shares, 389 closed up, 129 went down and 91 ended flat.

At the Shanghai Stock Exchange, 529 stocks went up, but 226 down and 85 flat. Fortune NG Fung Food (Hebei) was the top gainer, with its share price rising 10.03 percent to 10.64 yuan. Zhengjiang Longsheng Group and Shandong Infrastructure also saw their share prices sealed at the maximum cap while Meidu Holding dropped 6.63 percent as the biggest loser.

The industrial and Commercial Bank of China,with the largest trading volume, rose 0.55 percent to 5.51 yuan. Gansu Yasheng Industrial (Group),with the largest transaction value, was up 6.98 percent to 12.56 yuan in the morning.

In the Shenzhen market, Wuzhong Instrument and Shenzhen Tellus Holding were top gainers, while Tongzhou Electronics led the fall. China Vanke ranked on top in terms of both trading volume and transaction value.

The agriculture sector led the surging tide this morning. The industrial index went up 4.19 percent. Fortune NG led the sector to the top gainer's list, followed by Yuan Longping High-Tech Agriculture, whose price climbed 10.01 percent. Companies in the real estate industry were also good performers.

As mainland stocks continued to move forward to unprecedented levels, to better regulate and develop the capital market has become one of the top priorities for the authorities. To combat irregularities in the market, the China Securities Regulatory Commission (CSRC) issued a new rule regarding stock trading at the end of last month. The Administrative Methods of Restrictions on Stock Trading by CSRC takes effect as of today.

According to the methods, when CSRC is in investigation about significant illicit trading conducts such as price manipulation and insider trading, it has the right to restrict transactions in the target accounts of the suspect person and of the related parties, for 15 days with possible extensions to 30 days, if severe violations or crimes are involved.

On the other hand, as a fruit of the ongoing China-US bilateral strategic dialogue, total investment quotas of the qualified foreign strategic investor (QFII) scheme could be raised from the current US$10 billion to US$30 billion, according to the Shanghai-based First Financial Daily.

The QFII scheme, launched by the end of 2002, has to date granted QFII titles to 52 overseas institutions, 49 of which have received a total investment quota of US$9.95 billion, leaving a mere US$50 million quota undistributed. The increase in the quota is likely to be warmly welcomed by foreign investors. The existing QFIIs have achieved a satisfactory result with 7.2 percent as investment return, higher than the 5.08 percent of domestic investment funds, in the first five months this year.