SHANGHAI: The stock market recovered yesterday, with the leading indicator rising more than 1 percent after the securities regulator said it would tighten the supervision of large new share issues by listed companies.
The benchmark Shanghai Composite Index rose 45.65 points to close at 4238.18, with 512 out of 910 stocks closing higher. The Shenzhen Component Index dropped 1.02 percent, or 158.25 points, to close at 15328.42. The turnover on the two bourses amounted to 134.9 billion yuan, down 0.4 percent from Monday.
An investor monitors price changes at a securities house in Haikou, Hainan province. The Shanghai Composite Index rose 1.09 percent to close at 4238.18 yesterday. Shi Yan
"The government's efforts to clamp down on undue raising of capital in the stock market appears to have temporarily lifted investor sentiment," said Wu Feng, an analyst at TX Investment Consulting Co ltd.
Ping An Insurance, Shanghai Pudong Development Bank and Daqin Railway reportedly have plans for new shares issues raising a total of around 250 billion yuan.
Ping An Insurance shares jumped 4.07 percent to close at 68.04 yuan yesterday, after the company was quoted by the China Securities Journal as saying it will prudently consider the timing and size of fund-raising as well as the market situation.
Financial stocks led the rally yesterday. China Minsheng Banking Corp Ltd surged 5.02 percent to close at 12.98 yuan while China Life rose 4.97 percent to 37.2 yuan.
Sinopec increased 3.52 percent to close at 16.76 yuan, after its parent company was reported to have won government subsidy for oil refining.
"Bargain hunters moved in because many of the stocks have fallen to very low levels, especially for banks," said Wu.
"The stock market is expected to rebound from this week," said Zhu Haibin, an analyst at Essence Securities.
The injection of capital from investment funds is also due in the next couple of weeks.
But market liquidity pressures still exist because of initial public offerings and conversion of non-tradable shares into tradable ones, analysts said.
China Railway Construction Corporation, the world's third largest construction contractor, which began the A-share subscription for retail investors yesterday, is expected to attract 2.8 trillion yuan from the market, analysts said. The Beijing-based company plans to raise 22.25 billion yuan by issuing around 2.45 billion A shares
Over 180 billion yuan-denominated non-tradable shares are to be converted into tradable ones in the following week, including those of Ping An Insurance, China Merchants Bank and China Railway Group Limited.
Source:China Daily
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