Yahoo!  My Yahoo!  Mail
				News Home - Help

News Home Top Stories World Asia Pacific Business Technology Entertainment Sports Photos -- News by Country -- Indonesia Malaysia Philippines Singapore Thailand -- Greater Asia -- China Hong Kong Taiwan
	Yahoo! Asia News Search Yahoo! News

		advertisement
Monday July 2, 5:19 PM China shares end up on big-caps, bond fears linger SHANGHAI, July 2 (Reuters) - Chinese stocks closed 0.41 percent higher on Monday, reversing an earlier fall as investors sought safe havens in large-cap stocks, but trade was volatile as worries lingered over a bond issue that could sap liquidity from the market. The Shanghai Composite Index ended at 3,836.294 points, having fallen as much as 2.53 percent by mid-afternoon. The index closed 2.39 percent lower on Friday, hit in part by the news of official plans to issue 1.55 trillion yuan ($204 billion) in bonds. Gaining Shanghai stocks outnumbered losers by 536 to 331. Turnover in Shanghai A shares was low at 88.6 billion yuan, down significantly from Friday's already thin 103.7 billion yuan and only one-third of the daily record of 267.5 billion yuan, hit on May 30. Despite the modest gain at the close, analysts said market sentiment was weak. "The market will most likely continue to fall. I predict it will end Friday around the 3,500 to 3,600 level," said Qian Qimin, analyst at Shenyin & Wanguo Securities. Yangtze Electric Power Co. , one of the index's biggest movers and most active stocks, closed up 5.16 percent at 15.90 yuan, buoyed by media reports on Monday that its parent may purchase 40 to 45 percent of Anhui Province Energy Group Co. Sinotrans Air Transportation Development soared 6.19 percent to 13.89 yuan on news that it had won preliminary approval from China's civil aviation authority to form a joint cargo airline venture with three South Korean firms, including Korean Air Co. . BOND SALES The Finance Ministry said on Friday that it would issue special treasury bonds directly to the central bank in exchange for part of the $1.2 trillion in foreign currency reserves under the central bank's control. It said, however, that the central bank could later sell the bonds to the market. Investors had panicked last week, fearing a flood of new supplies of securities, with the stock index falling more than 3 percent in intraday trading on Thursday and Friday. State media said on Monday, however, that bond sales would be carried out in stages. No specific time table was given for the sale of the bonds, but the increase in this year's debt ceiling suggests they will all be issued this year. "It is too hard to say how the market will perform within the next few months as we are still uncertain about the magnitude of the impact of this policy and the timing of other potential policies," Qian said. Banking stocks were mixed, with some analysts saying the bond news would affect the financial sector the most. Merchants Bank ended down 2.85 percent at 23.88 yuan and Pudong Development dropped 3.03 percent to 35.48 yuan. Banks were also reacting to the China Banking Regulatory Commission's order on Friday that small and medium-sized banks rein in lending and step up their oversight of credit flows to prevent borrowed funds from going into stocks. But Industrial and Commercial Bank of China , the market's biggest company by market capitalisation, ended up 1 percent at 5.06 yuan, after it said on Monday that it had raised 4.45 billion yuan for a fund to invest client money in Hong Kong equities. ICBC was also supported by investors adjusting their portfolios to add index heavyweights amid market volatility -- a trend that also boosted leaders in other sectors such as steel. Top steel maker Baoshan Steel , the index's biggest mover on Monday, closed up 6.45 percent at 11.71 yuan, while smaller rival Baotou Steel dropped 3.86 percent to 6.72 yuan. ($1 = 7.61 yuan)