CHINA SHARES: Index Breaks 2,800 Mark With 2.5% Surge On Record Turnover

With two straight days of massive gains, A shares are flirting with levels of six months ago.

THE SHANGHAI COMPOSITE, the benchmark index tracking China’s A shares, leapt 2.5% today to finish at 2,806.94, while Hong Kong shares added 1.15% to 23,207.31.

Today’s stellar performance led in large part by metal and mining stocks follows a 3.1% rise on Friday, not bad for an index that was the world’s second worst performer in the first half.

Daily trading turnover for shares making up the Shanghai Composite surged to 235.2 bln yuan today, a record high for calendar year 2010.

The bourse easily matched levels seen five months ago with today’s leap, a welcome sight for investors who saw the index lose around 30% of its value in the first half, making it the world’s most bearish market save Greece during the period.

Chinese-language media today cited analysts as saying the bull run still has some wind left in its sails, especially given expectations that the US Federal Reserve will take fresh rate action to jumpstart a still stagnant economy and anemic employment market situation.

Commission-based Smiles: Citic Securities, which was named best equity house and best bond house by FinanceAsia Magazine this year, has a 52-wk price range of 10.42-23.66 yuan with a trailing P/E of 15.83x. Photo: Company

Also the continued weak greenback meant sustained strength in US dollar-denominated commodities markets, which enticed investors to run up resources stocks valuations.

Indeed, metal and coal shares were some of the best performers in China today, backed not only by a weak US dollar but also by anticipation of continued strong demand for raw materials spurred on in large part by China’s consistently solid economic expansion.

The metals subindex was the top performer of the day, adding nearly 7.8% by the 3.00 p.m. close of trading.

Jiangxi Copper (SHA: 600362; HK: 358) surged its daily limit of 10% today to finish at 37.65 yuan, as did coal firm Shanxi Guoyang New Energy Co Ltd (SHA: 600348), closing at 19.09 yuan.

Provincial neighbor Shanxi Xishan Coal and Electricity Power Co Ltd (SZA: 000983) closed up 7.1% at 24.50 yuan.

Gold Card: Miners like Shandong Gold are living high with their own country clubs on the surge in precious metals. Photo: Company

Gold continued to shine, with the COMEX gold price rising 0.41% to 1,350.80 usd per ounce.

This was good news for Zijin Mining Group Co Ltd (HK: 2899; SHA: 601899), one of China’s top gold producers as well as a miner and refiner of copper and other non-ferrous metals, who saw its shares rise 7.6% today to 8.61 yuan.

Shandong Gold Mining Co Ltd (SHA:600547) rose 0.4% to 61.71 yuan.

Metals and mining firms were not the only standouts today, with a broad range of sectors helping pull the Shanghai Composite to near half-year highs.

Brokerages jumped on the daily trading turnover surge, with traders eagerly eyeing higher commission income.

Citic Securities (SHA: 600030) rose by its daily 10% limit to finish at 12.42 yuan.

Meanwhile, China Vanke (SZA: 000002), the country’s largest listed real estate firm, continued its ascent, adding 4.7% today to close at 8.84 yuan.

This comes after welcome news in the sector of no new onerous restrictions being placed on the industry and adds to the developer’s 0.5% valuation rise on Friday.

Investors were also cheered by China Vanke’s just released September sales figures which jumped 160.1% year-on-year to 14.21 bln yuan, the second consecutive monthly record.

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