China's key stock index closed 1.40 percent higher on Tuesday, led by PetroChina as well as coal and brokerage companies, but turnover shrank ahead of a long holiday weekend. The Shanghai Composite Index ended at 3,523.405 points, after hitting an intra-day high of 3,544.229. Gaining stocks in Shanghai outnumbered losers by 610 to 256.
PetroChina, the market's largest stock, rose 1.31 percent to 17.06 yuan after the company posted a worse-than-expected 32 percent fall in first-quarter net profit. The stock had fallen more than 7 percent in the previous two sessions.
"Investors were already expecting a poor result for PetroChina, and the market had factored that in, so the stabilisation of PetroChina shares helped the index hold steady," said Wu Nan, analyst at Xiangcai Securities.
But turnover in Shanghai A shares contracted to 99.2 billion yuan ($14.2 billion) from Monday's 108.8 billion yuan, as some investors cut holdings to reduce risk over the May Day holidays on Thursday and Friday.
Investor sentiment has improved since last week's cut in the stock trading tax signalled authorities wanted to support the market, and many analysts see a possibility of an index rise to about 4,000 points in coming weeks. But the index faces immediate technical resistance on its early April peak of 3,656 points, which was tested unsuccessfully last week. Yanzhou Coal Mining jumped 7.96 percent to 21.30 yuan on Tuesday in its highest volume since mid-October, after saying its first-quarter net profit jumped 113 percent.
Power shares outperformed with Huaneng Power up 8.04 percent to 9.00 yuan, despite saying on Monday that it expected net profit to drop at least 50 percent in the first quarter, when many power producers were hit by coal shortages caused by fierce winter weather. "Both coal and power prices have room to rise, and such shares are viewed by some investors as undervalued," said Zhang Qi, analyst at Haitong Securities.
Brokerage shares soared in the afternoon, with Sinolink Securities, a mid-sized brokerage, jumping its 10 percent daily limit to 50.12 yuan after saying net profit in the first quarter jumped 368 percent. Brokerages would benefit from a longer-term recovery of the stock market.
Baoshan Iron and Steel rose 2.25 percent to 13.19 yuan after posting a 16 percent rise in first-quarter earnings, beating analysts' forecasts for roughly flat profit, as rising steel prices offset a surge in raw material costs. Bank of China gained 2.41 percent to 5.09 yuan after saying net profit in the quarter soared 85 percent.
Jinduicheng Molybdenum gained 6.83 percent to 25.96 yuan after saying net profit in 2007 rose 19 percent. Some traders are talking of a short-term target of 30 yuan for the stock, which listed earlier this month.
Suning Appliance advanced 2.69 percent to 51.55 yuan after saying profit rose 67 percent in the first quarter. Sichuan Changhong Electric Appliance rose 2.53 percent to 6.89 yuan after a 13 percent gain in quarterly profit.
Among losers, China International Marine Containers plunged 6.68 percent to 16.21 yuan after reporting quarterly profit fell 30 percent, partly because of a drop of investment returns. Zijin Mining tumbled its 10 percent daily limit for a second straight day to 11.28 yuan, after soaring 95 percent from its IPO price in its debut last Friday.
The Shanghai Stock Exchange intervened to cool speculation in Zijin on Friday by imposing a half-hour trading halt when the stock had nearly tripled at one stage, and traders said the stock could fall further as speculators continued to flee it.
Zhejiang Sanlux Rubber and Puyang Refractories Group, which also enjoyed exceptionally strong debuts in Shenzhen on Friday and were suspended temporarily due to abnormal share price movements, plunged their 10 percent limits for a second straight session as well on Tuesday.
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