| Stocks keep soaring at close on Thursday |
SHANGHAI, June 21 -- DOMESTIC stocks rose after a central bank survey showed households rate equities a better investment than bank deposits, suggesting more of their savings will flow into the market. Ping An Insurance (Group) Co gained.
The Shanghai Composite Index, which tracks the bigger of mainland's stock exchanges, rose 1.2 percent to 4,230.82. The Shenzhen Composite Index, which covers the smaller one, added 0.1 percent to 1,245.19.
``The enthusiasm toward equities is still rising among investors and the buying sentiment will go on for some time,'' Nsaid Wu Kan, an analyst at Shanghai Securities Consulting Co in Shanghai, Bloomberg reported.
More than 40 percent of the 20,000 households surveyed by the People's Bank of China chose stocks and mutual funds as their preferred investment. The proportion that opted for bank deposits fell by 4 percentage points to 26.3 percent, the lowest in six years, the quarterly survey showed. That's the first time stocks have been preferred to savings since the survey started in 1999.
Ping An Insurance, the nation's second-biggest insurer, jumped 3.25 yuan, or 4.6 percent, to 73.91 yuan (US$9.7). The insurer has won approval to take over Ping An Bank through its Shenzhen Commercial Bank unit and then merge the two, it said in a statement today.
China Life Insurance Co, the nation's biggest insurer, surged 3.31 yuan, or 8.3 percent, to 43.42 yuan. China Life Asset Management Co, its investment unit, said yesterday it formed a partnership with US private equity firm Aetos Capital LLC to evaluate investment opportunities in China's real estate market.
Insurers have been rising on expectation the stock market rally will boost equity investments and interest rate increases will lift returns on fix-income assets, such as banking deposits.
Chinese investors have been shifting their savings into the stock market, seeking higher returns than banking deposit rates that trail inflation.
Local investors opened 324,500 securities accounts for investing in mainland equities and mutual funds on June 19, according to the China Securities Depository & Clearing Corp. About 27 million accounts have been set up this year, five times that for the whole of 2006, according to the clearing house.
Commercial banks' deposit rates are capped at the central bank's one-year deposit rate of 3.06 percent, less than the 3.4 percent inflation rate.
Household yuan deposits fell by 278.4 billion yuan in May, after sliding in April for the first time since February 2003, according to the central bank.
Domestic brokerages will be allowed to buy shares outside the mainland for clients for the first time, the China Securities Regulatory Commission said last night.
That's an expansion of the so-called qualified domestic institutional investor, or QDII, program, which previously allowed only commercial banks to buy non-domestic shares. China's financial institutions have so far been allowed to invest a total of US$15 billion overseas.
China wants more money to be invested abroad to slow the growth in the country's US$1.2 trillion in currency reserves, which are flooding the domestic market with cash.
Some of the biggest companies fell on the news. TCL Corp, China's biggest publicly traded consumer-electronics maker, slid 0.34 yuan, or 4.9 percent, to 6.56 yuan. Founder Technology Group Corp, the country's second-largest computer maker, retreated 0.49 yuan, or 3.3 percent, to 14.22 yuan.
Elsewhere, Huaxia Bank Co, partly owned by Deutsche Bank AG, gained 0.08 yuan, or 0.6 percent, to 12.53 yuan. The lender said it was approved to sell as much as 4 billion yuan of a special hybrid bond to boost capital.
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