By Dong Zhixin (chinadaily.com.cn)
Updated: 2008-01-02 16:52

Chinese stocks started the New Year with a slight increase on Wednesday, as investors remain confident about corporate earnings in 2008.

The benchmark Shanghai Composite Index rose 0.21 percent to close at 5,272.81 points, after gaining 97 percent in 2007 and 130 percent in 2006.

Other indicators also went up, with the smaller Shenzhen Composite Index rising 1.76 percent to 1,472.44, while the CSI 300 Index of major companies in the two bourses went up 0.88 percent to 5,385.10.

More than 90 percent of the yuan-denominated A-shares posted gains in the two markets, as turnover expanded to 198.7 billion yuan, indicating a vote of confidence in the profitability of the listed firms amid an economic boom.

China's economy is expected to post its sixth year of double-digit growth in 2008 after an estimated 11.5 percent growth in the past year. The economic boom is slated to help boost corporate earnings.

On the back of the growth in the broader economy and corporate income, analysts expect the stock market to continue with the bull run, which started at the beginning of 2006.

The analysts also cited a steady rise in the value of China's currency as a positive factor. On Wednesday, the central bank set the yuan’s central parity rate at 7.2996 against the US dollar, the highest level since China ended its peg to the greenback in July 2005.

On the first trading day in 2008, Olympics-related stocks staged a spectacular performance, as investors believed the upcoming Beijing Olympics will give a huge boost to their firms' earnings.

Among them, shares in Beijing Jingxi Tourism Development Co. and China Quanjude Group, renowned for its Beijing roast duck, jumped their daily limit of 10 percent to 26.69 yuan.

Bucking the trend, several big caps dropped, limiting the scale of Wednesday's increase. PetroChina and the Industrial and Commercial Bank of China (ICBC) who have the biggest weightings in the Shanghai Composite Index, both dropped.

The country's largest oil producer declined 1.23 percent to 30.58 yuan, followed by a 0.62 percent decrease in China's biggest lender to 8.08 yuan.