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China's shares at its two bourses yesterday finished almost flat yesterday.
But bank shares rose after China Merchants Bank reported a jump in first-half earnings, outperforming the overall market that ended slightly lower in lacklustre trade.
Shanghai's composite index dipped 2.49 points to close the day at 1,644.30. Shenzhen's shares gained 4.66 points to 3,393.99.
The four domestic listed banks - Merchants Bank, Pudong Development Bank, Shenzhen Development Bank and Minsheng Bank - closed up between 0.81 and 1.83 percent, cheered by the healthy earnings report.
Shanghai's B-share index closed down 0.22 percent at 150.704 points, while Shenzhen's inched up 0.03 percent to 243.31.
Turnover on the hard-currency share markets, open to foreigners, was a mere US$5.1 million in Shanghai and HK$30.8 million (US$3.95 million) in Shenzhen.
"Thin volume today indicated a lack of buying interest," said analyst Li Jie of Huatai Securities.
"But it also indicated investors were reluctant to sell. We expected share indices to move narrowly in the near term."
China's shares staged a brief rally on Friday due to investors speculating late in the session on possible government policy support announcements over the weekend, as share prices were hovering at a seven-week low.
"The market lost steam today due to the absence of policy support," said analyst Wu Jiang of Zhejiang Securities.
Markets are often driven by government policies - indices rallied in late June when the government scrapped the unpopular scheme to sell down its shares, but have fallen since July due to a lack of fresh policy measures.
Investors were also cautious during the corporate results reporting season, which runs until the end of August, brokers said. Chinese companies have reported a mixed bag of results.
Oil major Sinopec said on Sunday first-half net profit dropped 45 per cent year-on-year due to adverse market conditions and lower product prices. Its A shares ended flat at 3.60 yuan (US$0.43).
Hainan Airlines was the biggest B-share decliner. It closed down 1.40 percent at US$0.847.
On the foreign exchange market in Shanghai, the yuan ended two notches stronger at 8.2767 to the US dollar as export-related dollar sales kept the domestic currency firm, dealers said.
The yuan moved in an extremely narrow range, touching just one other rate, at 8.2768. Turnover, a decent US$270 million on Friday, was not immediately available.
The yuan has been shackled around the 8.2770 level this year, near the strong end of its usual trading band of 8.2760 to 8.2800, supported by China's strong exports.
"We saw continued exports-related dollar selling today, with most transactions done at 8.2767," said a Chinese bank dealer.
Trade is the key driver of the yuan's value as the currency is fully convertible only on the current account. China earned a trade surplus of US$15.64 billion in the first seven months.
Dealers said they expected the yuan to stay firm in the near term, hovering near the strong end of its band of 8.2760 to 8.2800, which the central bank generally enforces.
Yesterday, the yuan strengthened against the Japanese yen to end at 7.0206 for every 100 yen from 7.0386, and ended one notch firmer against the Hong Kong dollar at 1.0607. It lost ground against the euro to finish at 8.1635 from Friday's 8.1190.
（China Daily August 20, 2002）
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