| Minsheng Banking leads stocks gain for third day |
SHANGHAI, June 7 -- MAINLAND'S stocks rose for a third day after an official newspaper said speculation that the government will impose a capital gains tax is "ridiculous.'' China Minsheng Banking Corp led the advance.
"Investors are quite relieved to hear clarification of the rumors about a capital gains tax,'' said Lu Yizhen, who oversees about US$640 million at Citic-Prudential Fund Management Co in Shanghai, according to Bloomberg. "The market has stabilized after the recent fluttering.''
The Shanghai Composite Index, which tracks the bigger of mainland's stock exchanges, rose 3 percent to 3,890.80. The Shenzhen Component Index climbed 2.9 percent to 12,696.005.
The government won't impose a capital gains tax on share trading because there's no law permitting such a levy, Shanghai Securities News said in a cover story, citing Liu Jipeng, professor of the Capital University of Economics and Business.
Rumors of the tax are "ridiculous'' and "based on ignorance,'' according to the newspaper, one of three state-run newspapers used by financial authorities for announcing policies and corporate disclosure.
Concerns over the increased stamp duty, and speculation that further punitive measures would be introduced to slow a rally, has led to a slowdown in the numbers of new brokerage accounts opening.
New Accounts
New investors opened 189,056 securities accounts for trading mainland shares and mutual funds on June 5, the smallest increase since April 6, according to the latest figures released by the China Securities Depository & Clearing Corp Account openings peaked at more than a million on April 30 and have averaged about 300,000 a day this quarter.
Mainland's stock market "is clearly dominated by retail investors who we can't understand sitting in London or Singapore,'' said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which oversees about US$125 billion.
"It's all about the human psychology of the Chinese investor who's never been through anything like this before, who probably never knew the dotcom bubble existed,'' Dolphin said inKuala Lumpur. "Do they know that the Nasdaq was once at 5,000? To them, it's like a casino.''
The Nasdaq Composite Index yesterday closed 24.05 lower at 2,587.18. The CSI 300, which tracks yuan-denominated A shares listed on domestic two exchanges, is up 86 percent this year, after more than doubling in 2006.
'Just a Major Correction'
Minsheng Banking, the nation's only privately controlled lender, rose 0.37 yuan, or 3 percent, to 12.73 yuan. Suning Appliance Co, China's second-biggest home appliance retailer, climbed 1.50 yuan, or 3.2 percent, to 49 yuan.
The recent decline is "just a major correction,'' said Alex Wong, a fund manager at Ample Capital Ltd. in Hong Kong. "I don't think we have a trend reversal. After this correction, the market will stabilize and the long-term uptrend remains.''
Wu Xiaoling, deputy governor of the central bank, said yesterday the stock market gains are "inevitable'' given the country's economy expansion. China's growth accelerated to 11.1 percent in the first quarter, the fastest pace among the world's major economies.
Elsewhere, Shanghai Shimao Co, which is owned by property tycoon Xu Rongmao, jumped 1.62 yuan, or the 10 percent daily cap, to 17.77 yuan. The company said it plans to sell as many as 700 million shares worth 7.5 billion yuan (US$983 million) to units of Shimao Property Holdings Ltd in exchange for 4.07 million square meters of developments and 750 million yuan of cash.
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