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Shares edge up slightly, gloom worries remain

(China Daily)
Updated: 2008-12-16 08:13

Shanghai stock market rose slightly yesterday, supported by hopes for fresh official steps to aid the economy, but gloom over the economic outlook caused it to underperform other markets in the region.

The Shanghai Composite Index ended up 0.52 percent at 1964.374 points. Turnover in Shanghai A shares remained fairly active but shrank to 55 billion yuan from Friday's 73.1 billion yuan.

"The index is likely to retest the 1850-point level; airlines, direct flights and the small equities board theme are only able to cause short-lived rallies in related sectors, which suggests investor sentiment is weak," said Chen Jinren, analyst at Huatai Securities.

Shares in firms based in Xiamen, facing Taiwan province, were strong as daily direct flights, new shipping routes and direct postal links opened between the mainland and Taiwan province. Xiamen Port Development jumped 7.22 percent to 7.72 yuan.

But airline shares fell back sharply after soaring last week on speculation about possible merger activity in the industry and news of government aid for some of the top carriers.

China Southern Airlines and China Eastern Airlines both tumbled about 8 percent on profit-taking, after jumping their 10 percent daily limits on Thursday and Friday.

Analysts said investors were uncomfortable with the big premiums of the carriers' A shares to their Hong Kong-listed H shares.

The cabinet's endorsement of the plan for the growth enterprises board boosted shares in companies which the market believes might eventually benefit from listing affiliates on the board.

Shanghai Fudan Forward Science & Technology Co, which invests in technology-related ventures, jumped its 10 percent limit to 6.57 yuan.

HSI 2% higher

Hong Kong shares rose 2 percent yesterday led by China Mobile on expectations of imminent 3G licensing, while bulk shippers tracked a rise in the global freight index.

But the main index closed below intra-day highs as some banks bucked gains in the broader market.

The benchmark Hang Seng Index ended 288.56 points higher at 15046.95, joining a rally in regional markets on hopes a bailout for troubled US automakers could still materialize.

Mainboard turnover fell to HK$42.6 billion from HK$58.8 billion on Friday.

The China Enterprises Index of top locally listed mainland firms rose 1.2 percent to 8005.21.

Agencies