Shanghai shares close up nearly 5%, extending gains
Shanghai stocks closed up 4.82 percent on Friday, rising for a second day on strong US growth figures and a global market rally, as dealers speculated the government is also supporting the market. China's benchmark Shanghai Composite Index surged 148.76 points to 3,232.35 on turnover of 474.6 billion yuan ($74.2 billion). Despite two days of substantial gains, the index still lost 7.85 percent for the week. The Shenzhen Composite Index, which tracks stocks on China's second exchange, soared 5.40 percent, or 94.62 points, to 1,846.83 on turnover of 425.0 billion yuan. It fell 9.44 percent over the week. In Hong Kong, however, shares fell 1.04 percent, or 226.15 points, to 21,612.39 on turnover of HK$112.88 billion ($14.55 billion). Dealers said a mixture of positive news boosted the markets, including a Chinese interest rate cut and stronger-than-expected US growth figures for the second quarter, which helped global markets to rally on Thursday. "It's not one single factor pushing the market up," Zheshang Securities analyst Zhang Yanbing told AFP. "Several factors are working together, such as the rate cut and the local debt swap programme, and the rises in global markets." The US economy grew much faster than expected in period from April-June, expanding at an annual rate of 3.7 percent, official data showed Thursday, rather than the 2.3 percent previously estimated. The news came after China on Tuesday cut interest rates for the fifth time since November and reduced the amount of money banks must keep on hand in a bid to stimulate the flagging economy. The cuts helped spur a rally in Asian shares, even though analysts say more action will be needed to dispell fears about stalling Chinese growth that have hit global markets this week. The Chinese government has also expanded a programme which allows local governments to issue bonds to refinance debt, according to state media. "At least the earlier scare over heavy falls is gone for now," Zhang added. - 'Massive correction' - Global markets were roiled earlier this week on the potential impact of slowing growth in the Chinese economy, the world's second-largest. "After the massive correction earlier in the week, investors are apparently starting to realise that the drop was overdone," Gerry Alfonso, a Shanghai-based trader at Shenwan Hongyuan Group, told Bloomberg News. "There is a lot of talk of state-linked funds purchasing stocks and helping the market," he added. China launched a rescue package for shares after a year-long rally collapsed in June, which has included funding the China Securities Finance Corp. to buy stocks on behalf of the government. Trading on Chinese stock markets has been highly volatile for weeks, with Shanghai now down nearly 40 percent since a year-long, debt-fuelled rally collapsed two months ago. Rail-related firms rose in Shanghai. China Railway Construction surged by its 10 percent daily limit to 13.21 yuan and China Railway Erju also jumped 10 percent to 11.56 yuan. Airline Air China jumped 8.90 percent to 7.83 yuan in Shanghai after it reported its first-half net profit surged more than 720 percent year-on-year to 4.19 billion yuan. Shanghai-listed Agricultural Bank of China rose 1.01 percent to 3.01 yuan despite reporting flat growth in first-half net profit at 104.32 billion yuan.
