Asia: China Rallies Alone
It was a volatile session for China shares, with the Hang Seng reaching an intraday high of 29,763.34 before finishing at 28,954.55. In China, the Shanghai Composite Index rallied 62 points, ending up 1.03% at 6,092, the second time the composite closed above the 6,000 benchmark. Talk of a bubble around China stocks on dealing floors is steadily increasing as the big gains continue to defy regional losses.
"Short term, one can easily assume we have a bubble building up. The question is, how long will it last in '08?" says Catherine Boutet, head of Asian investments for ABN Amro. "If you look to the number of IPOs and the demand for them either in Hong Kong or the [Chinese] 'A' share market, this is one thing one should keep in mind."
China shares were lifted by the banking sector after China Merchants Bank forecast that it would double net earnings on the year and China CITIC Bank confirmed reports that it was looking to buy a portion of Bear Stearns (BSC). The companies gained 2.33% to 42.08 yuan, and 2.82% to 11.68 yuan, respectively, in Shanghai trading. Bank of China was up by as much as 7.65% to 7.04 yuan, while $180-billion China Life Insurance gained 0.67% to 72 yuan, also in Shanghai.
In Hong Kong, PetroChina slid 2.45% to HK$18.30 after reaching an all-time intraday high of HK$19.82 in morning trading. In telecoms, China mobile continued to rally, up 1.2% to HK$143.10, while rival China Unicom shed 1.99% to HK$15.78.
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