Financial shares, strong earnings buoy mainland indexes

Source:Global Times Published: 2017/8/28 17:58:40

Chinese mainland stocks extended a rally on Monday, with the Shanghai index trading above the psychologically key 3,300 point level for a second day.

Investors' confidence was fanned by a flurry of solid mid-year earnings reports from major companies.

The benchmark Shanghai Composite Index closed up 0.93 percent to 3,362.65 points on Monday. The index hit above the 3,300 point mark - a level which has proven stiff resistance - during the two previous consecutive trading days. This triggered some analysts to call the start of a bull market.

The SSE 50, dubbed China's "Nifty Fifty" index, jumped as much as 2.20 percent, marking a two-year peak.

The blue-chip CSI300 index gained 1.24 percent, ending at 3,842.71 points.

Among 2,194 Chinese companies that have released their financial reports for the first half of 2017, 71 percent posted increases in net profits year-on-year, Beijing-based China Securities Journal reported on Monday.

Top coal miner China Shenhua Energy Co Ltd, for instance, reported its strongest semi-annual results in four years, joining a slew of major State-owned firms that saw their earnings beat forecasts.

Financials led the gains, with brokerages jumping as much as 6 percent amid expectations that they will be the biggest climbers in a strong stock market recovery.

"The surge in brokerage shares means the upward trend of the broad market has been confirmed," Yang Delong, chief economist at First Seafront Fund Management Co, wrote in a Reuters report.

Sentiment was also supported by signs that the central government is stepping up efforts to make State-owned enterprises (SOEs) more efficient, which could cut excess capacity in some sectors.

China has set up a fund with an initial capital of 5 billion yuan ($752.7 million) and is dedicated to supporting mixed-ownership reforms by SOEs, the China Securities Journal reported on Monday.

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