Bulls drive stocks to 5th day of gains

SHANGHAI stocks snapped out of earlier losses in the morning session on expectations that the liquidity crunch will be eased.

The Shanghai Composite Index gained 0.25 percent, or 5.97 points to 2,409.55 at the trading close, extending its gains to the fifth straight day. Turnover stood at 105.5 billion yuan (US$ 16.7 billion).

"Both yesterday and today's turnover stood above 100 billion yuan, which is a good signal sent by the capital market, as more funds flow in," said Pan Mingli, analyst at Orient Securities.

Cheng Yimin, strategic analyst at China Post Securities, agreed with Pan that the liquidity will be eased, and recommended lender and insurer stocks.

A cut of 0.5 percent in the banks' reserve ratio to be executed tomorrow will pump about 400 billion yuan into the system, said Liu Bin, visiting professor of the Institute of International Economics at Nankai University.

"Investors should not expect the stock market to rebound on tightened monetary policy plus domestic and external economic uncertainties," Liu said. He disagreed with analysts who thought the market was turning bullish.

Lenders were mixed. Bank of China lost 0.33 percent to 3.05 yuan. Agricultural Bank of China retreated 0.37 percent to 2.71 yuan. China Citic Bank gained 0.45 to 4.45 yuan.

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Niall Ferguson: Chinese More Committed to Capitalism

October 22, 2010 -- In a panel about getting America back from the depths of economic despair at The Daily Beast's Innovators Summit in New Orleans, Niall Ferguson, historian and Harvard Business School professor, told Sir Harold Evans that, "The Chinese are more committed to capitalism than we are."

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