Chinese shares closed up 1.10 percent on Monday led by energy and drug stocks amid bargain hunting after recent steep losses, dealers said. The Shanghai Composite Index, which covers A and B shares, was up 32.66 points at 2,993.43 on turnover of 138.8 billion yuan (20.3 billion dollars).
"The bubble in the market valuation has been corrected to a degree, and given the US shares' gains on Friday the market would be relatively well supported," Great Wall Securities analyst Zhang Yong told Dow Jones Newswires. Gains on Wall Street on Friday and strengthening in other Asian markets Monday helped boost China's market, but broad weakness in financial companies limited the gains, traders said.
Drug producers surged for the second consecutive session on hopes that China's recently released national drug reference catalogue would standardise pharmaceutical products, boost confidence and increase demand, traders said. Zhejiang Conba Pharmaceutical rose by the 10 percent daily trading limit to 10.35 yuan after rising 10 percent Friday. Holley Pharmaceuticals rose 9.2 percent to 6.98 yuan following a 6.9 percent gain Friday.
Oil majors rose on strong first-half earnings announced by refiner China Petroleum and Chemical and a rise in global crude prices. Sinopec ended up 2.2 percent at 13.39 yuan after it said first-half net profit rose more than fourfold from a year earlier to 33.25 billion yuan. PetroChina rose 1.7 percent to 14.20. But banks were broadly lower with China Minsheng Banking down 1.5 percent to 7.25 yuan. Shanghai Pudong Development Bank ended down 1.6 percent at 22.34 yuan.
The Shanghai A-share index added 34.29 points, or 1.10 percent, to close at 3,141.85 on turnover of 138.4 billion yuan. The Shenzhen A-share index gained 19.95 points, or 1.94 percent, to 1,049.19 on turnover of 75.4 billion yuan. The Shanghai B-share index rose 1.99 points, or 1.00 percent, to 200.10, while the Shenzhen B-share index gained 5.39 points, or 1.08 percent, to 505.19.
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