By Claire Zhang
SHANGHAI, Feb 11 (Reuters) - China's main stock index closed almost flat in massive turnover on Wednesday, as profit-taking from this year's 24 percent rally was offset by new money flooding into the market on hopes for an early economic recovery.
Expectations that the government would provide fresh aid to industrial sectors once again helped the Chinese market to outperform foreign markets, which slid on disappointment over the latest U.S. financial rescue plans.
The Shanghai Composite Index swung widely between positive and negative territory before closing down 0.19 percent at 2,260.820 points. It fared much better than Hong Kong's Hang Seng Index, which was down more than 2 percent.
Turnover in Shanghai A shares expanded to a nine-month high of 171.8 billion yuan ($25.2 billion) from Tuesday's 135.1 billion yuan. Losing Shanghai A shares narrowly outnumbered gainers by 494 to 426.
Consumer stocks such as liquor makers were strong after the Shanghai Securities News and 21st Century Business Herald quoted unnamed sources as saying China would soon announce steps to help light industry, with the goal of boosting domestic consumption and moving the sector up the value chain in the next three years.
The government would cut consumption taxes on alcohol, cosmetics, jewellery and watches, raise import tariffs on luxury consumer goods, and lift export tax refunds on products such as home appliances and furniture, the newspapers said. The threshold at which individuals start paying income tax might be raised.
Wuliangye Yibin, a major maker of traditional Chinese liquor, surged 8.35 percent to 17.90 yuan.
TRADE DATA
China announced weaker-than-expected January trade data on Wednesday that painted a grim picture of the economy; exports fell 17.5 percent from a year earlier, compared to economists' forecasts of a 10.8 percent drop, while imports tumbled 43.1 percent.
However, the data was to some degree distorted by a long Lunar New Year holiday which occurred in January 2009 but in February 2008. So some investors continued to bet that economic growth would start rebounding in the next few months, in the wake of strong January bank lending data revealed last week.
'The market will remain quite strong for a couple of weeks, though after the recent rally, consolidations may occur at any time,' said Zhang Yanbing, an analyst at Zheshang Securities.
He said the rally could extend as far as 2,500 points, though other analysts see strong technical resistance at the late September peak of 2,333.
Stock valuations may again become a worry for some investors because premiums of Shanghai A shares over Hong Kong-listed H shares in the same companies have risen so high. The average premium climbed as far as 55 percent on Wednesday, its highest level since November.
Brokerages were strong on Wednesday as the huge market turnover suggested their commission income might revive. Haitong Securities raced up 8.34 percent to 13.38 yuan.
Some major banks rose after underperforming the market for days, partly on concern that the government-directed surge in their lending could increase bad debt. China Construction Bank climbed 1.61 percent to 4.43 yuan.
Aluminium Corp of China (Chalco), playing catch-up after being suspended for a day during which it denied talk of a change in senior management, jumped 3.87 percent to 9.93 yuan.
But copper producers fell back as the weak Chinese trade data helped to end a six-day rise by Shanghai copper futures. Jiangxi Copper, which had soared its 10 percent daily limit for three straight days, dropped 2.50 percent to 17.95 yuan.
Beijing Jingxi Tourism Development rose 10 percent to 9.92 yuan. Traders linked the surge to local media reports that Beijing was gearing up to build a movie theme park.
Guizhou Guihang Automotive gained 10 percent to 10.01 yuan, after being suspended since the end of last year. It said it planned to issue up to 110 million shares at 8.03 yuan each to group companies to buy aerospace assets.
($1 = 6.83 Yuan)
(Editing by Andrew Torchia)
((junjie.zhang@thomsonreuters.com; (8621) 6104-1775; Reuters
Messaging: junjie.zhang.reuters.com@reuters.net))) Hong Kong report Taiwan report Shanghai indices Shenzhen indices Hong Kong indices H-share index Red share index SPEED GUIDES RELATED NEWS AND OTHER TOPICS China news All equity news Greater China news Chinese summary Hong Kong news Chinese hot stocks Taiwan news China IPOs Chinese diary Hong Kong IPOs Press digests Keywords: MARKETS CHINA STOCKS CLOSE (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
SHANGHAI, Feb 11 (Reuters) - China's main stock index closed almost flat in massive turnover on Wednesday, as profit-taking from this year's 24 percent rally was offset by new money flooding into the market on hopes for an early economic recovery.
Expectations that the government would provide fresh aid to industrial sectors once again helped the Chinese market to outperform foreign markets, which slid on disappointment over the latest U.S. financial rescue plans.
The Shanghai Composite Index swung widely between positive and negative territory before closing down 0.19 percent at 2,260.820 points. It fared much better than Hong Kong's Hang Seng Index, which was down more than 2 percent.
Turnover in Shanghai A shares expanded to a nine-month high of 171.8 billion yuan ($25.2 billion) from Tuesday's 135.1 billion yuan. Losing Shanghai A shares narrowly outnumbered gainers by 494 to 426.
Consumer stocks such as liquor makers were strong after the Shanghai Securities News and 21st Century Business Herald quoted unnamed sources as saying China would soon announce steps to help light industry, with the goal of boosting domestic consumption and moving the sector up the value chain in the next three years.
The government would cut consumption taxes on alcohol, cosmetics, jewellery and watches, raise import tariffs on luxury consumer goods, and lift export tax refunds on products such as home appliances and furniture, the newspapers said. The threshold at which individuals start paying income tax might be raised.
Wuliangye Yibin, a major maker of traditional Chinese liquor, surged 8.35 percent to 17.90 yuan.
TRADE DATA
China announced weaker-than-expected January trade data on Wednesday that painted a grim picture of the economy; exports fell 17.5 percent from a year earlier, compared to economists' forecasts of a 10.8 percent drop, while imports tumbled 43.1 percent.
However, the data was to some degree distorted by a long Lunar New Year holiday which occurred in January 2009 but in February 2008. So some investors continued to bet that economic growth would start rebounding in the next few months, in the wake of strong January bank lending data revealed last week.
'The market will remain quite strong for a couple of weeks, though after the recent rally, consolidations may occur at any time,' said Zhang Yanbing, an analyst at Zheshang Securities.
He said the rally could extend as far as 2,500 points, though other analysts see strong technical resistance at the late September peak of 2,333.
Stock valuations may again become a worry for some investors because premiums of Shanghai A shares over Hong Kong-listed H shares in the same companies have risen so high. The average premium climbed as far as 55 percent on Wednesday, its highest level since November.
Brokerages were strong on Wednesday as the huge market turnover suggested their commission income might revive. Haitong Securities raced up 8.34 percent to 13.38 yuan.
Some major banks rose after underperforming the market for days, partly on concern that the government-directed surge in their lending could increase bad debt. China Construction Bank climbed 1.61 percent to 4.43 yuan.
Aluminium Corp of China (Chalco), playing catch-up after being suspended for a day during which it denied talk of a change in senior management, jumped 3.87 percent to 9.93 yuan.
But copper producers fell back as the weak Chinese trade data helped to end a six-day rise by Shanghai copper futures. Jiangxi Copper, which had soared its 10 percent daily limit for three straight days, dropped 2.50 percent to 17.95 yuan.
Beijing Jingxi Tourism Development rose 10 percent to 9.92 yuan. Traders linked the surge to local media reports that Beijing was gearing up to build a movie theme park.
Guizhou Guihang Automotive gained 10 percent to 10.01 yuan, after being suspended since the end of last year. It said it planned to issue up to 110 million shares at 8.03 yuan each to group companies to buy aerospace assets.
($1 = 6.83 Yuan)
(Editing by Andrew Torchia)
((junjie.zhang@thomsonreuters.com; (8621) 6104-1775; Reuters
Messaging: junjie.zhang.reuters.com@reuters.net))) Hong Kong report Taiwan report Shanghai indices Shenzhen indices Hong Kong indices H-share index Red share index SPEED GUIDES RELATED NEWS AND OTHER TOPICS China news All equity news Greater China news Chinese summary Hong Kong news Chinese hot stocks Taiwan news China IPOs Chinese diary Hong Kong IPOs Press digests Keywords: MARKETS CHINA STOCKS CLOSE (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.