Chinese shares staged a dramatic reversal on Thursday, closing slightly higher after sinking in the morning session. Bargain-hunting drove the indices higher by the close, with most shares closing higher and real estate, banking and aviation leading the gains.
The benchmark Shanghai Composite Index dived as much as 6 percent in the morning, but it closed at 3,804.05 on Thursday, up 42.45 points, or 1.13 percent.
PetroChina pulled down the index during the morning as it opened more than 9 percent lower when it resumed trading at 10:30 a.m. Its results, released on Wednesday evening, failed to meet investor expectations, dealers said.
Net profit for 2007 was 145.625 billion yuan (20.6 billion U.S. dollars), up only 2.4 percent from a year earlier. Profits were crimped by high international crude prices, loss-making refining and sales divisions and the increased government 'windfall' oil profits tax, analysts said. It closed 3.01 percent lower at 21.9 yuan.
China decided on Wednesday to temporarily suspend the collection of enterprise income tax on mutual funds, which could give the market a boost.
Property shares jumped. Lujing Real Estate surged 9.66 percent to 12.03 yuan, while China Vanke was up 5.96 percent to 24.9 yuan after reporting a doubling in net profit last year.
China Merchants Bank surged 4.61 percent to 30.64 yuan after the country's largest credit card issuer said on Wednesday that net profit surged 124.36 percent in 2007 on increased loan revenue and wider interest rate margins.
Pudong Development Bank rose 6.51 percent to 34.7 yuan. Its controversial refinancing plan was approved by shareholders on Wednesday, meaning an inflow of no more than 800 million yuan into the market.
The share prices of five major air carriers -- Air China, Shanghai Airlines, China Eastern Airlines, Hainan Airlines and China Southern Airlines -- all rose by the daily limit of 10 percent, partly because the yuan broke a new record against the U.S. dollar, which would benefit the aviation industry, analysts said.
Baosteel rose 7.12 percent to 14.14 yuan, after the Shanghai-based company obtained regulatory approval to acquire two steel makers in south China's Guangdong province.
The Shenzhen Component Index ended at 13,548.61, up 504.41 points, or 3.87 percent. The Hushen 300 Index tracking the performance of both the Shanghai and Shenzhen stock exchanges closed at 4,001.83, up 112.97 points, or 2.9 percent.
Combined turnover was 160.02 billion yuan, vs. 135.43 billion yuan.
Gains outnumbered losses by 779 to 63 in Shanghai and by 640 to25 in Shenzhen.
Source:Xinhua
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