英文： Shanghai shares close sharply higher on market-boosting program
A- and B-share prices closed sharply higher in heavy trade, as retail¹ investors³ carried out strong buying in response to further indications that the government is launching a major program apparently⁴ aimed at ramping⁶ up share prices, dealers⁷ said.

Shares gained sharply on Friday following publication of an editorial in the official China Securities Journal which was apparently aimed at boosting investor² confidence and was seen by many as confirmation⁸ of rumours⁹ that the government is implementing¹⁰ a ten-point package aimed at driving share prices higher.

This has since been followed by the publication of a similar editorial on Saturday, as well as the publication of reports that the government has given up a plan to sell off state shares via the stock market and the publication of provisional regulations raising the threshold for listed companies seeking to launch additional share offers.

All of these actions appeared to confirm the rumours of a ten-point market -boosting package, they said.

The composite A- and B-share index closed 144.59 points or 9.25 pct higher at 1,707.31 on turnover¹¹ of 53.20 bln yuan after trading to a high of 1,709.06 and a low of 1,647.50.

The A-share index gained 150.77 points or 9.2 pct to 1,781.79 on turnover of 47.83 bln yuan after trading between 1,793.64 and 1,719.38.

The SSE-30 index rose 276.51 points to 3,145.02.

The B-share index closed 13.70 points or 9.7 pct higher at 155.44 on turnover of 648.08 mln usd after trading between 155.53 and 149.90.

Analysts¹³ said there had been widespread expectations that the government would step up its efforts to ramp⁵ up share prices after the composite index dropped below a key support level at 1,500 points, raising the risk that the market's weak fundamentals would force a sharp correction.

Many investors consider 1,500 points the market's policy bottom amid a belief that the government is not prepared to allow prices to correct below that level.

Some analysts said they believe the implementation¹⁴ of fresh market-boosting measures was motivated by a need to generate a market rally and create a generally positive atmosphere in the run-up to the Communist Party's 16th Congress in autumn.

Others said the government may merely be seeking to heighten the market's ability to channel funds to cash-strapped state enterprises, and noted¹⁵ that institutions, who tend to take a longer-term view of stock investment, appeared to be taking profits as retail investors carried out strong buying.

They also said the government may be preparing the market for the launch of several huge A-share offers by Hong Kong-listed companies including China Unicom, PetroChina and China Southern Airlines.

Guotai Junan Securities analyst¹² Zhang Jun said that although the government's actions in recent days resemble moves taken in May 1999 to ramp up share prices, the conditions are different this time around, and there is now less scope for the market to mount a sharp speculative¹⁶ rally.

In 1999, the publication of an editorial in the People's Daily triggered a rally which drove the composite index up from about 1,000 points to about 1,700 points, he said.

Shares started that rally from prices at an average of about 20 times earnings¹⁷ per share, and the market received a strong boost from the injection of substantial amounts of money from banks.

However, this time around, shares are already at very high PE ratios, and tighter restrictions¹⁸ on the use of bank loans to buy shares will restrict the injection of bank money into the market, Zhang said.

At the close of trade on Friday, Shanghai and Shenzhen-listed A-shares were priced at an average of 77.08 times their 2001 earnings per share, while B-shares were at 145.91 times their EPS.

Amid lingering deflation, corporate¹⁹ earnings are likely to have deteriorated²⁰ further in the six months to June.

Zhang noted that Friday's editorial said China's markets should not be judged by the standards applied²¹ to developed markets, and said this may mean that the government believes domestic stocks can trade at much higher price-to-earnings ratios than stocks on overseas markets despite their consistently weak earnings performance.

However, domestic investors still consider PE ratios as an important benchmark when making investment decisions, he said.

Zhang said he believes government attempts to boost the market may merely raise the market's bottom to about 1,600-1,700 points, and prices could simply settle at these levels following a few days of major volatility²².

DBS Securities analyst Wu Jian said events since Friday reflect a 180-degree turn in policy on the market, and said the government appears to be acting²³ with a view to solving its immediate²⁴ problems, and has left major questions unanswered regarding the implications of the policy changes.

In particular, there is now great uncertainty²⁵ about the government's plans for the sale of its majority stakes in listed firms.

A Xinhua News Agency report said that instead of selling off state shares via the stock market, the Ministry²⁶ of Finance will inject part of its state share holdings into the State Social Security Fund, which will derive²⁷ income from dividends²⁸ paid on these investments and from the sale of shares to strategic investors.

This leaves unanswered questions about whether the social security fund will be involved in the management of listed companies, and whether the government is yet prepared to face the idea of selling off majority stakes in listed firms to strategic investors.

Sinopec closed 0.32 yuan higher at 3.56 on volume of 160.9 mln shares, while Baoshan Iron & Steel was up 0.41 at 4.47 on 139 mln shares and China Merchants Bank was up 0.9 at 9.87 on 95.1 mln shares.

Sichuan Changhong gained 0.86 to 9.41 on 35.6 mln shares.

Among B-shares, Shanghai Dajiang closed 0.058 usd higher at 0.64 on 23 mln shares, while Shanghai Steel Tube rose 0.061 to 0.67 on 7.8 mln shares.

Zhejiang Southeast Electric Power rose 0.07 to 0.765 on 20.8 mln shares, while Heilongjiang Electric Power gained 0.059 to 0.645 on 8.6 mln shares

中文：上海全日收市 - A、B股急升逾9% / 当局终止国有股减持
交易员称, 国务院正式宣布暂停减持国有股后, 散户积极入市, 上海A、B股各自急升逾9%, 交投活跃。

他们指, 种种迹象显示, 政府决心支撑股市, 激发投资者入市信心。

上证综合指数全日收市升144.59, 报1,707.31, 成交532亿人民币, 波幅介乎1,647.50至 1,709.06。

A股指数升150.77, 或9.2%, 报1,781.79, 成交478.3亿人民币, 波幅介乎1,719.38至 1,793.64。

B股指数亦升13.70, 或9.7%, 报155.44, 成交6.4808亿美元, 波幅介乎149.9至155.53。

上证30指数升276.51, 报3,145.02。

上周市场传出政府将推出托市10招, 其后《中国证券报》周五发表头版评论, 强调中国市 场属「新兴」及「转轨」市场, 被视为当局有意为股市造势的证明, A、B股周五已偷步上扬。

到了周末, 媒体再刊类似评论, 财政部及中国证监也随即宣布, 停止在国内证券市场执行 《减持国有股筹集社会保障资金管理暂行办法》中, 关于利用证券市场减持国有股的规定 , 并不再推出具体的实施办法。

部分分析员预料, 在中共16大前, 当局仍会推动股市向上。