Law's approval propels shares higher
1/11/2005 13:45
Fu Chenghao/Shanghai Daily news
The approval of a
newly-amended Securities Law, widely considered as an incentive for the stock
markets, sent Chinese mainland shares to a higher close yesterday. Confidence
was also boosted by a more attractive compensation offered by the seventh batch
of 18 companies involved in the national share reform, dealers said. The 10
Shanghai-listed companies will offer compensation of an average 3.61 shares for
every 10 held, the highest since the program started in April. The shanghai
Composite Index, which covers yuan-denominated A shares and foreign-currency B
shares, surged 1.11 percent to 1,092.82. The A-share Index rose 1.11 percent to
1,148.88 while the B-share Index added 0.68 percent to 59.76. The shenzhen
Composite Index, which tracks the mainland's smaller bourse, closed up 0.86
percent at 265.39. The law, passed by China's top legislature late last week,
allows financial derivatives for the first time and permits select companies to
have a diversified mix of banking, insurance and securities businesses. Among
other amendments, the State Council will be granted the final say on whether
brokers are allowed to provide loans to investors and if state enterprises are
allowed to trade shares on the stock market. The amended law, to take effect
from January 1, also encourages more funds flows into the market and includes
articles on the setting up of a state fund for the protection of
investors. In yesterday's trading, petrochemical companies rose after news of
PetroChina delisting three subsidiaries to turn them into private
companies. China petroleum & Chemical Corp rose 3.16 percent to end at
3.92 yuan (48 US cents) and Sinopec Yizheng Chemical Fiber Co surged to the 10
percent daily limit to close at 2.27 yuan. Huaxia bank Co rose 1.89 percent
to 4.31 yuan after posting a 58 percent rise in third-quarter profit on higher
interest income. Shanghai pudong Development Bank Co advanced 2.65 percent to
close trading at 8.52 yuan.
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