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Chinese stocks post slight gains

Category:[world] [CHINA] [Chinadaily.com.cn Exclusive]


A woman looks at stock prices on an electronic board in Beijing June 5,2007. [Reuters]

Chinese stocks edged up slightly on Wednesday following wild swings in the last few sessions since a stamp tax hike last week.

The benchmark Shanghai Composite Index gained 0.24 percent to close at 3,776.32 points, after moving between 3,682.79 and 3,821.70.

Trading was volatile as the market opened marginally higher before falling into negative territory, only to rise and fall again, indicating investors' continued anxiety over the government cooling measures.

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What may further unnerve investors is the remarks central governor Zhou Xiaochuan made at a gathering in Beijing on Monday.

The central bank might use monetary tools to cope with the recent surge in food prices and maintain the stability of the currency, Zhou said. "Whether to raise the interest rate or not depends on the consumer price index (CPI) in May." 

The data is scheduled to be released by the National Bureau of Statistics next Tuesday. Analysts expect the figure to be pushed above central bank's target of three percent by recent rises in food prices.

In a bid to appease the stock market, central bank vice governor Wu Xiaoling Wednesday urged investors to keep faith in the country's stock market, saying the government's policies were geared towards supporting a sound, rising trend.

"Short-term ups and downs in the market are inevitable, " Wu said on the sidelines of a conference in the northern port city of Tianjin. You're always going to get swings. How long those swings last does not matter. What really counts is the fundamental trend,"

Meanwhile, Gao Xiqing, vice-chairman of the National Social Security Fund -- one of the country's biggest institutional investors, said his agency is bullish about the long-term outlook for the stock market.

Tuesday's trading volume in the Shanghai Stock Exchange was a bit lower than the previous session, hitting 175.21 billion yuan, while turnvoer in Shenzhen was slightly higher than Monday, reaching 98.07 billion yuan.

China's stock market became extremely volatile after the Ministry of Finance tripled the stamp tax on stock trading to 0.3 percent last Tuesday night, forcing many investors into panic selling. The Shanghai Composite Index tumbled 6.5 percent the day after the duty hike before rebounding slightly on May 31.

The index fell again the day after before plunging 8.3 percent on Monday, the second sharpest fall in a decade. On Tuesday, it plummeted as much as seven percent before picked up gradually to close in positive territory.

Highlighting the extent to which investors' confidence has been affected, the number of new A-share accounts opened on Tuesday hit a two-month low of 162,00, statistics from the China Securities Depositary and Clearing Corporation showed. That compared with a record 385,000 new accounts opened on May 28, the day before the stamp tax hike.



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