Chinese shares surge over 4%, led by banks and oils

BEIJING, Dec. 3 (Chinese media) -- Chinese equities staged a

big rally on Wednesday, with the key Shanghai index rising over four percent,

which was led by gains for heavyweight banks and oils.

The benchmark Shanghai Composite Index, which covers both A and B shares, closed at 1965.41 points, up 4.01 percent or 75.78 points. The smaller Shenzhen Component Index added 245.26 points, or 3.61 percent, to close at 7041.07 points.

Investors watch share prices at a stock brokerage firm in Chongqing, a municipality in southwest China, Dec. 3, 2008. China's benchmark Shanghai Composite Index on the Shanghai Stock Exchange closed at 1,965.41 points on Wednesday, up 75.78 points, or 4.01 percent, from the previous close. (Chinese media Photo)
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Gainers outnumbered losers by 860 to 6 in Shanghai

and by 739 to 3 in Shenzhen. Combined turnover was up to 132.78 billion yuan

(19.4 billion U.S. dollars).

The surge came after China Securities Regulatory

Commission chairman Shang Fulin said the regulator was considering allowing

institutional investors to invest more in the equity market.

The banking sector, which has been weak and dragging

down the indices over the past weeks, put up an upbeat performance after China

Construction Bank (CCB) said in a stock-filing that the Central Huijin

Investment Co., Ltd., an investment arm of sovereign wealth fund the China

Investment Corporation, had increased its CCB A-shares to 70.8 million by Nov.

28.

CCB, also listed in the Hong Kong stock market, also

said Bank of America had bought 19.6 billion of its H-shares from Central

Huijin.

As a result, nearly 20 bank stocks rose by 5.30

percent on average. CCB gained 5.20 percent to end at 4.25 yuan. The Industrial

and Commercial Bank of China, the country's largest lender, rose nearly three

percent to 3.87 yuan. Bank of China added 3.19 percent to finish at 3.23 yuan.

Shanghai Pudong Development Bank, China Merchants

Bank and Industrial Bank all jumped by more than six percent to end at 12.90

yuan, 12.49 yuan and 14.69 yuan, respectively.

Oils also gained significantly and helped push up the

indices.

PetroChina, the largest component of the key Shanghai

index, rose 2.25 percent to 11.40 yuan. Sinopec, another heavyweight, added 4.42

percent to 8.27 yuan.

Insurers also rebounded from their weak performance

in the last two days.

Heavyweight China Life, the nation's leading life

insurer, rose4.13 percent to 18.90 yuan, while Ping An Insurance jumped by

6.21percent to close at 23.95 yuan.

Despite the fall in world oil prices, shares of coal

producers,which market analysts believed were undervalued after continuous

falls, made a huge rally with an average eight percent increase.

Nearly 15 shares, including Shanxi Lanhua, Shanxi

Guoyang New Energy, Yanzhou Coal Mining Company and Pingdingshan Tian'an Coal

Mining, jumped by the 10 percent daily limit.

Textile companies continued to benefit from the weak

yuan against the U.S. dollar, which investors believed would help them increase

exports.

China's currency, the yuan, fell by the daily limit

against the U.S. dollar for a second day on Tuesday, its fourth straight daily

decline. The yuan finished at 6.8870 per U.S. dollar on the over-the-counter

market, having declined 0.5 percent against its central parity rate.

Golden Sun Securities said in an investment report

that the stock market, despite a big rally in the day, was still faced with

heavy pressure because of the uncertainties of the world economy and a large

number of to-be-unlocked shares.

More than 23.3 billion shares would become tradable

this month as their lock-up period ended. Such a volume was the second largest

this year, only after that in August, which saw about 27.55 billion shares being

unlocked and traded.

China started a program in 2005 to convert

non-tradable shares into tradable stocks. And major shareholders of non-tradable

stocks were subject to a one or two years of lock-up.