By Dong Zhixin (chinadaily.com.cn)
Updated: 2007-09-24 16:13

Special Coverage: Stock Market Related readings: Stocks defy rate hike to record high Stock market capitalization tops GDP

China's main stock index sailed past the 5,500 mark briefly on Monday, driven by Sinopec and other resource shares.

The benchmark Shanghai Composite Index rose 0.56 percent on Monday to close at 5,485.01 points, after hitting an all-time high of 5,506.06. The new record marked an increase of 105.83 percent from the end of last year.

The Shenzhen Composite Index grew 0.48 percent to 1,506.23, while the CSI 300 Index, which covers 300 major companies on the Shanghai and Shenzhen stock exchanges, went up 0.84 percent to 5,513.89.

Sinopec was the largest single contributor to the Shanghai index, jumping 3.71 percent to close at 18.99 yuan per share. At one point during the trading session, Asia's largest oil refiner grew as much as 6.77 percent.

Analysts attribute the rise to rival PetroChina's imminent Shanghai listing, saying Sinopec's valuation will also benefit from the debut. On Monday, China's securities watchdog is scheduled to examine China's largest oil producer's detailed proposal for yuan-denominated A shares.

Other resource shares were also strong. Aluminum Corporation of China surged 3.55 percent to 49.03 yuan, while Zhongjin Gold Co. increased 1.64 percent to 141.26 yuan.

In the real estate sector, Poly Real Estate Group Co. rose 5.55 percent to 75.14 yuan, followed by a 3.65 percent gain in China Vanke to 30.99 yuan.

Financial shares were mixed, with Shenzhen Development Bank soaring 5.39 percent to 38.11 yuan. China Merchants Bank rose 5.23 percent to 37.86 yuan, compared with a 2.02 percent increase in Ping An Insurance (Group) Company of China to 121.93 yuan.

However, the Bank of China fell 0.17 percent to 5.94 yuan, and China Life dropped 0.84 percent to 56.47 yuan.

Monday's overall advance was capped by liquidity concerns brought about by recent and upcoming IPOs by a series of major companies in the mainland bourses.

In September and early October, the listing of Bank of Beijing, China Construction Bank, China Oilfield Services Ltd, China Shenhua Energy Co, and Petrochina is estimated to raise more than 200 billion yuan.

Furthermore, regulators are also pumping liquidity out of the market. The central bank ordered the commercial banks to set aside more money as reserves earlier this month.

The Ministry of Finance has announced plans to issue 200 billion yuan of special treasury bonds, the second batch of a planned 1.55 trillion yuan sale to finance the forex investment company.

The market faces increasing pressure for a major correction, as the valuation is very high, analysts said.

More than 84 percent of fund managers believe the market is overvalued, China Securities Journal cited a  survey as saying on Monday, with more than 29 percent of those polled saying the current price level is 30 percent more than the actual value.