China's main stock index climbed 2.23 percent on Wednesday, regaining its footing after a 3.64 percent tumble the day before, as investors snapped up blue chip and second-tier shares at their new, lower levels.
The Shanghai Composite Index ended at 3,986.043 points, rebounding after an initial drop of more than 1 percent, and traders said wide fluctuations were likely to continue as it grapples with the psychologically key 4,000 level. Gainers far outnumbered losers by 784 to 91. More than 30 shares went up their 10 percent daily limit.
Turnover in Shanghai A shares was very heavy at 166.0 billion yuan, but down from Tuesday's 197.4 billion. "I expect the index will jump 10 percent this month," said Zhou Lefeng, analyst at Xiangcai Securities. "Most investors realise the risks but find it hard to resist the temptation of profits. We feel it's risky but we have to keep buying as much as we can or risk falling behind other companies."
The official China Securities Journal on Wednesday cited an estimate that retail investors accounted for 65 to 70 percent of transactions on China's stock market, the highest of any bourse world-wide.
Tuesday's drop, the third-largest point drop this year, and Wednesday morning's early slide were considered a technical correction to an overheated market, wiping out gains scored since the start of this month. The market has also been weighed down by institutional investors locking in profits, in part due to concerns about possible government moves to cool the market.
In a sign of Beijing's stepped-up efforts to crack down on stock market irregularities, J.P. Morgan's China asset management joint venture said on Wednesday it had fired a senior manager because of an official investigation over stock trades. Institutions also grew cautious as some shares became overvalued, with Jilin Aodong Medicine Industry, for example, jumping to 113.90 yuan from 32.98 yuan since the start of 2007.
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