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China's stocks edged up slightly yesterday after index-heavyweight Shenzhen Development Bank reported decent half-year earnings, brokers said.
But investor confidence remained broadly weak as the market turnover fell to a level unseen since mid-June, brokers said.
The Shanghai composite index, tracking A and B shares, gained 10.09 points, or 0.62 percent, to end at 1646.722, while Shenzhen's also rose 26.19 points, or 0.78 percent, to 3393.60.
The Shanghai B-share index increased 0.693 points, or 0.46 percent to close at 150.422 points, while Shenzhen's ended up 0.43 percent higher at 241.93.
Turnover was meager at US$4.46 million on Shanghai's B-share market and HK$29.5 million (US$3.78 million) in Shenzhen.
Hard currency B shares are available to foreign investors.
Shenzhen Development Bank outperformed its underlying Chinese-only A-share index with a 1.23 percent rise after reporting a 34 per cent year-on-year leap in first-half earnings.
"The bank's result was like a bright spot in the market when investors were looking for reasons to buy," said analyst George Jin of Everbright Securities.
Interest in the Shenzhen Development Bank spilled over to other listed banks.
China Merchants Bank gained 1.16 percent to end at 10.46 yuan, while Minsheng Bank rose 0.72 percent to 12.60 yuan.
But brokers said weak turnover showed sentiment was fragile.
"If you look at the turnover, the rise might not mean the beginning of a market recovery," Jin said.
The insulated China markets ignored the Federal Reserve's decision to leave US interest rates unchanged, which depressed other markets in the region, brokers said.
Domestic investors were likely to continue trading on corporate earnings during a reporting season which runs to the end of this month, as hopes of early index-boosting policies from the government seemed to be fading, analysts said.
"There are still some expectations in the market of government policy support, but they are not strong," said analyst Lu Weiming of Orient Securities.
Garment maker Shanghai Matsuoka Co bucked the market trend, ending down 0.40 per cent at US$1.50 after reporting an 18 percent year on year fall in interim profits due to weaker exports.
China's yuan gained fresh ground against the US dollar yesterday as domestic exporters kept up a steady supply of the hard currency to the national foreign exchange market.
The Chinese currency, which is under the central bank's tight grip, did not react to an overnight Federal Reserve decision to hold US interest rates steady, dealers said.
The yuan ended at its intraday high of 8.2766 to the dollar, compared with 8.2767 on Tuesday.
"Trade was really dull, the yuan ticked only two points in the whole session," said a Chinese dealer in Beijing.
Turnover, an active US$500 million on Tuesday, was not immediately available.
The yuan has been trading near the strong 8.2770 level this year, bolstered by China's decent trade surplus of US$15.64 billion for the first seven months.
Trade flow is the key drive for the yuan's value as the currency is fully convertible only on the current account.
Dealers said they expected a solid yuan in the near term, hovering near the firm end of its hair-thin band of 8.2760 to 8.2800, which the central bank generally enforces.
Officials have said they planned to widen the yuan's band gradually to cope with changes in China's balance of payments after the country became a World Trade Organization member last December, but they have given no specifics or a timetable.
The yuan weakened against the Japanese yen to end at 7.0155 for 100 yen from 6.9599 and eased against the Hong Kong dollar to 1.0608 from 1.0607.
(China Daily August 15, 2002)
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