China's main stock index up

China's main stock index surged more than 2 percent in heavy trade on Wednesday as share prices and turnover neared levels which prompted government action to cool the market last month. "This upward momentum means the market is overheating again," said Zheng Weigang, senior analyst at Shanghai Securities.
"Gains in companies with poor earnings are raising the structural risks in the market." The Shanghai Composite Index jumped at the opening and ended the day up 2.56 percent at 4,176.479 points, after climbing as much as 2.98 percent at one stage.
It was the seventh straight daily rise, bringing the index within 4 percent of an all-time high hit on May 29, just before authorities hiked the stock trading tax to cool speculation. The tax hike caused the index to plunge as much as 21 percent over five days as millions of panicked individual investors dumped stocks.
But shares have rebounded rapidly since then as authorities, apparently surprised by the size of the tumble, took steps to restore confidence. They approved the launch of new mutual funds and ran bullish editorials about stocks in state-owned media.
Gaining Shanghai stocks overwhelmed losers by 761 to 97 on Wednesday. Turnover in Shanghai A shares swelled to 216.9 billion yuan ($28.5 billion) from Tuesday's 202.7 billion, not far from levels around 250 billion seen at the height of May's bull run. Traders said the index could return to its record intra-day high of 4,335.963 in days or weeks.
Authorities may try again to cool the market, but it may prove more difficult this time since stocks have rebounded so strongly after the first attempt, they said. Some financial blue chips helped to lead the market up on Wednesday, with Industrial & Commercial Bank of China up 4.35 percent at 5.28 yuan after describing its expansion plans at a shareholders' conference on Tuesday.
Longjian, a steel refiner, rose its 10 percent daily limit to 6.01 yuan. Among other gainers on Wednesday, major real estate firms surged as the yuan rose sharply to a new post-revaluation high against the dollar, boosting their asset values. Vanke climbed 5.45 percent to 19.55 yuan.
Stocks related to the south-western cities of Chongqing and Chengdu remained strong after the government chose them to lead reforms to reduce the rural-urban wealth gap. Chongqing Gangjiu jumped its 10 percent daily limit for the third straight day to 15.95 yuan.