China's main index jumps

China's main stock index climbed to a fresh record closing high for the fifth straight day on Friday, boosted by banking shares after several banks reported slightly better-than-expected earnings this week.
The market was also encouraged by positive coverage in the official Chinese media of the index's rise above 5,000 points for the first time on Thursday. The tone of the coverage suggested authorities would not intervene to cool the market any time soon.
The Shanghai Composite Index surged 1.49 percent to end at 5,107.668 points, after hitting an intra-day high of 5,125.359. Turnover in Shanghai A shares edged up to a two-week high of 164.2 billion yuan ($21.7 billion). But rising Shanghai stocks only marginally outnumbered losers by 426 to 415, showing substantial profit-taking in sectors other than banking after the index reached the 5,000-point milestone.
For the first time this week, the average premium of A shares over Hong Kong-listed H shares rose, to 68 percent from 66 percent on Thursday. Premiums had dropped since Monday after China said it would let residents buy overseas stocks, which could eventually divert money into cheaper H shares.
Friday's rise brought the index's gains so far this year above 90 percent, and some analysts think the risks of a significant pull-back in the short term are high.
But with traders already talking of new targets of 5,500 or 5,600 points for this year, few believe any drop would last more than a few weeks. CITIC Bank jumped 3.30 percent to 11.57 yuan after reporting an 82 percent jump in first-half net profit on Thursday. But its H shares fell 0.86 percent.
In a striking illustration of the difference in attitudes between Chinese and foreign investors, Bank of China rose 0.98 percent to 6.16 yuan in Shanghai but plunged 5.38 percent in Hong Kong on worries about its exposure to US subprime mortgages.
Bank of China said on Thursday that it held $8.965 billion in US subprime mortgage-backed bonds and $682 million in collateralised debt obligations at the end of June.
While investors in Hong Kong focused on the fact that the numbers were bigger than expected, domestic Chinese investors saw them as tiny compared to the bank's overall size - and believed the state-owned bank could always call on the Chinese government for assistance in dealing with the losses if needed.
However, Bank of China's Shanghai shares came well off their intra-day high of 6.30 yuan, suggesting some domestic investors were starting to get rattled by the H share's tumble. Industry leader Baoshan Iron & Steel, which has barely been dented by this week's cut of its fourth-quarter product prices, climbed 6.27 percent to 17.63 yuan.