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Chinese stocks soar on a rising yuan, strong inflows

Chinese share prices jumped 2.22 percent to a new closing high yesterday on strong fund inflows, due partly to a rising yuan, with investors favoring banks and power generators, dealers said.

Nearly 60 companies closed up by their daily 10 percent limit.

Dealers said solid corporate results were the latest theme to provide support to the market, while the yuan's slow but steady advance made Chinese assets more attractive and underpinned the gains.

The benchmark Shanghai Composite Index, which covers both A and B-shares, added 78.17 points at 3,596.44 on turnover of 145.54 billion yuan (US$18.83 billion).

The Shanghai A-share Index was up 82.15 points or 2.22 percent at 3,780.61 on turnover of 144.72 billion yuan and the Shenzhen A-share Index rose 27.04 points or 2.72 percent at 1,019.98, also a new record, on turnover of 76.73 billion yuan.

The central bank set the yuan central parity rate at 7.7220 to the US dollar -- the highest level yet since the July 2005 revaluation of the Chinese currency.

"The market was boosted by solid corporate results announced by major blue chips and the strong yuan," said Xu Ming, an analyst at Shiji Investment.

Dealers said they expect the advance to continue in the near future.

"In the short run, as fresh capital continues flowing in and more blue chips announce their first-quarter results, the bullish trend will likely be sustained," said Zeng Bo, an analyst at Changjiang Securities (長江證券).

Banks posted solid gains on hopes for robust profits, with many of the companies expected to report a doubling of earnings, dealers said.

The Shanghai B-share Index was up 4.45 points or 2.34 percent at 194.77 on turnover of US$816.32 million, and the Shenzhen B-share Index added 7.79 points or 1.42 percent at 554.91, an all-time high, on turnover of HK$680.17 million (US$87.99 million).

Meanwhile, Chinese regulators will limit the number of mainland companies listing their shares solely in Hong Kong in a bid to encourage enterprises to join Chinese bourses, a report said yesterday.

Beijing has introduced an unofficial policy allowing Chinese companies to list in the city only if they seek more than US$1 billion or plan a simultaneous listing on the mainland, the Financial Times reported, citing unnamed investment bankers and regulatory sources.
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