SHANGHAI: The Shanghai stock market index inched up 1.3 percent yesterday as investors shrugged off the prospect of higher bank interest rates and tighter liquidity in the banking system as a result of possible government action to rein in money supply growth.
The benchmark Shanghai Composite Index rose 50.27 points to close at 3,915.99, with 607 out of 997 companies closing higher. The turnover on the bourse increased by 7.8 billion yuan to 71.4 billion yuan from the previous trading day.
The index has dropped an aggregate 4 percent in the past two weeks, despite occasional rebounds.
Stock analysts said the market calm reflects the fact that investors have largely discounted the possible impact of the increase in the broad and narrow money supply in June.
According to figures released by the People's Bank of China yesterday, M2 (broad money supply) in June increased 37.78 trillion yuan, up 17.06 percent from the same period the year before and 0.32 percentage point from the end of May.
M1 (narrow money supply) rose 13.58 trillion yuan, gaining 20.92 percent from the year before and 1.64 percentage point from last month.
The outstanding balance of renminbi loans of the country's financial institutions reached 25.08 trillion yuan in June, up 16.48 percent from the year earlier and 0.23 percentage point from the end of the first quarter.
"The figures have merely confirmed the widely held expectations of the market. They gave no surprise to the investors," said Jason Chang, an economist at Standard Chartered Bank in Shanghai.
Chang added the market has already made the necessary corrections ahead of the central bank's announcement.
Source: China Daily
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