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Hopes for a fresh policy boost have finally
triggered a long-awaited potent rebound
on the stock markets after lows for more than five years.
Domestic stock markets rebounded by more than 5 per cent yesterday,
after closing down for six consecutive sessions with new 68-month lows.
But analysts differ as to whether the previous dives had hit the bottom.
Investors finally started to buy more actively yesterday on expectation
of a fresh policy boost, thus igniting a rare rally of the benchmark
Shanghai composite index.
The index surged by 5.3 per cent during the day to close at 1,251.518
points. Combined transactions in Shanghai and Shenzhen also almost doubled
yesterday to stand at 16.8 billion yuan (US$2 billion).
More than 30 stocks rose to their daily trade limit of 10 per cent
yesterday, a sharp contrast to the market performance on Monday and
Tuesday, when more than 40 stocks fell by nearly 10 per cent each day.
Before yesterday's rally, the Shanghai composite index had fallen below
the psychologically crucial 1,200-point level two days in a row and
finished at 1,188.931 on Tuesday, the lowest close since May 21, 1999.
"It is normal to see a technical rebound of the indices after they
touch new lows," said Liu Zimin, an analyst with CITIC Securities. "But
today's surge is the highest single-day rise in two years," she said.
The last comparable one-day surge was recorded in January 2003.
Shanghai's B shares also advanced by 5.11 per cent to 76.115 yesterday.
Shenzhen sub-composite index earned 5.05 per cent to finish at 3,221.21.
Apart from the technical reason, there have also
been market talks that the State Council might come up with new stimulus
to support the bourses,
which also heightened investment sentiment yesterday.
Liu said that auto stocks, many of which had undergone a sharp
correction over the past few months, were a leading force in yesterday's
market rally.
Some small and medium-capped stocks that had plunged heavily also
bounced.
(China Daily) | 
Updated: 2005-02-03 09:41
