Chinese shares rose 2.6 percent to their highest level in more than two years on Thursday, boosted by a strong debut for Bank of China shares in Hong Kong and renewed merger speculation among Chinese steel stocks.
The Shanghai composite index closed at 1,684.195 points, less than a point off its intra-day high. It was the highest close since April 16, 2004, when the index finished at 1.693,861. The market, which dropped 0.96 percent on Wednesday, has gained 17 percent in the last month. Thursday's turnover in Shanghai A-shares was a heavy 38.3 billion yuan ($4.8 billion), up from 32.9 billion yuan on Wednesday.
"The pricing of Bank of China's IPO was not too bad, which was a boost for the market today," said analyst Chen Huiqin with Huatai Securities.
Bank of China, which raised US $9.7 billion in its initial public offering, rose a better-than-expected 15.25 percent in its trading debut in Hong Kong.
China's five domestically listed lenders gained on the back of the IPO, with top Shanghai-listed lender China Merchants Bank Co Ltd rising 1.11 percent to 7.31 yuan and smaller Minsheng Banking Corp up 0.69 percent at 4.40 yuan. Both banks have said they plan Hong Kong listings.
Baosteel Group, China's largest steelmaker and parent of Baoshan Iron and Steel Co, said on Thursday that along with its subsidiaries, it now held 5 percent of Handan Steel.
Investors saw this as a sign that domestic steelmakers were joining the global M&A trend in the industry. "It's good news for steel counters, especially for the smaller ones," said analyst Peng Yong at ABN Amro TEDA Asset Management Co in Beijing.
Baosteel, one of the largest capital stocks, gained 0.68 percent to 4.47 yuan while Handan Steel jumped 7.78 percent to 4.85 yuan. Handan has soared from around 2.80 yuan at the start of last month because of M&A speculation.
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