Chinese shares closed up 0.78 percent on Wednesday, their highest level in 16 months, as bullish sentiment pushed investors to build fresh positions in large caps such as Sinopec Corp.
The benchmark Shanghai composite index finished at 1,340.162 points, its highest level since November 30, 2004, when it closed at 1,440.771 points. The index has now jumped 22 percent since December 1, 2005, due in part to strong technical buying after a four-year slump. "The market seems to be on the verge of reversing years of weakness," said fund manager Dong Lianghong at Boshi Fund Management Co Ltd.
"Sentiment is bullish, buoyed by factors including government pledges to support the market and signs that China's economy will continue to grow at a high rate this year." Analysts said the index could test short-term resistance of 1,350 points in coming days.
Sinopec, Asia's top oil refiner, was one of Wednesday's most active counters, closing 1.37 percent higher at 5.17 yuan.
The stock has jumped 26 percent since December 1 to outperform the broader market, supported by factors including a strong 49 percent growth in fourth-quarter earnings.
Shenzhen Expressway Co Ltd ended up 2.05 percent at 3.48 yuan after the toll operator posted 2005 earnings that beat market consensus and Macquarie Research raised the firm's 2006 earnings estimates by 3 percent.
China's major index has been Asia's worst performer over the past two years, but began to rebound late last year, helped by improving corporate earnings thanks partly to 9.9 percent economic growth last year and Beijing's market-friendly steps that include allowing more institutional investors into the market.
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