Chinese shares closed up 0.93 percent on Friday as investors shrugged off share supply worries after Beijing gave the go-ahead for its first IPO in nine months, dealers said. The Shanghai Composite Index, which covers A and B shares, was up 26.59 points at 2,880.49 on turnover of 151.3 billion yuan (22.2 billion dollars).
The market remained stable after Guilin Sanjin Pharmaceutical said it won approval to issue up to 46 million A shares through the initial public offering (IPO), traders said. "Stocks held up really well today. This is not surprising given how much care Beijing took in staging the first IPO after the hiatus," Yan Li, an analyst at Southwest Securities, told Dow Jones Newswires.
Yan said Beijing chose a small firm because it did not want to raise concerns about liquidity being tightened. The key index gained five percent this week, breaking 11-month highs, and the upward trend will continue as Beijing is not expected to launch large IPOs until it has tested the market with the smaller offerings.
Brokerages led the day's gains on expectations of a spike in commission fee income due to the robust performance of the markets. The Shanghai index has risen 58 percent since the beginning of the year. The resumption of IPOs will also provide brokerages with another income stream, traders said.
Sinolink Securities rose by the 10 percent daily limit to 21.46 yuan, Citic Securities rose 2.8 percent to 29.54 yuan and Northeast Securities was up 5.7 percent at 31.96 yuan. The Shanghai A-share index rose 28.01 points, or 0.94 percent, to close at 3,023.84 on turnover of 151.0 billion yuan, while the Shenzhen A-share index added 3.05 points, or 0.31 percent, to 991.74 on turnover of 77.6 billion yuan. The Shanghai B-share index was up 0.20 points, or 0.11 percent, to 184.46, while the Shenzhen B-share index gained 4.87 points, or 1.05 percent, to close at 469.36.
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