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Bull run driven by banks

By Zhang Ran (China Daily)
Updated: 2007-03-30 08:45

An investor monitors stocks at a securities trading house in Zhengzhou,
the capital of Central China's Henan Province.

Heavily weighted bank shares driven by speculation on the launch of stock
index futures yesterday helped the mainland's stock market to end a
fourth straight day in positive territory.

After the Shanghai Composite Index hit a mid-day high of 3,273.73 points,
a gain of more than 3 percent, it closed around the same level at
3,197.54.

Most stocks fell, however, leaving the financial sector, which climbed by
2.97 percent, to drive up the index.

"The big banks rose on anticipation of a launch of stock index futures,
which might occur in May. The banks are the major components of the
futures index," Zhang Qi, an analyst with Haitong Securities said.

CITIC China Securities' She Minhua agreed, adding that investors have
come back to banking shares for a comparatively conservative and steady
strategy after booking profits from speculation on small stocks with
low-prices in the last shares boom.

As many as 771 stocks fell yesterday.

Zhuhai Zhongfu Enterprise Co Ltd, a Zhuhai-based manufacturer of
polyethylene terephthalate (PET) bottles and the major vendor of
Coca-Cola and Pepsi Cola in China, dropped 4.95 percent to close at 8.65
yuan.

The firm's share price had been rising to its daily ceiling of 10 percent
for three days after it announced a buyout by CVC Capital Partners Asia
Pacific on Saturday, a leading Asia-Pacific equity fund based in
Australia, and a profit increase of 50 percent in 2006.

It's the first time this year that foreign investors will pay a
higher-than-market-traded price for a buyout. The private equity fund
will pay 1.65 billion yuan, partly borrowed from Citibank and JPMorgan,
for a 29 percent controlling stake in the bottle manufacturer, or 8.27
yuan per share 21 percent higher than the closing price of 6.84 yuan
before the announcement.

Many other industrial shares also ended weak yesterday, such as Baotou
Steel, which dropped 5.11 percent to 5.57 yuan.

(For more biz stories, please visit Industry Updates)

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