Chinese shares closed up 0.38 percent on Thursday, reversing early losses as bargain hunters picked up bank and real estate stocks in the afternoon session, dealers said. The Shanghai Composite Index, which covers both A and B shares, was up 10.83 points to 2,853.55 on turnover of 110.9 billion yuan (16.2 billion dollars).
Hopes of a rally before the weeklong National Day holiday starts next week fuelled demand during the afternoon, traders said. The Chinese Communist Party will celebrate the 60th anniversary of its rule on October 1. Investors believe that Beijing wants to keep the market stable before the national holiday because a robust market could serve as a symbol of the country's economic prowess and enhance the legitimacy of the party, traders said.
"Like many people, I am convinced that a rally is likely to occur before the National Day," Guoyuan Securities strategist Simon Wang told Dow Jones Newswires. "There's sufficient time for this to become a self-fulfilling prophecy." Banks and property developers led the gains. China Merchants Bank rose 2.6 percent to 14.98 yuan and China Citic Bank ended up 4.1 percent at 5.57 yuan. China Construction Bank rose 2.1 percent to 5.78 yuan. China Vanke, the country's largest property developer by market value, jumped 2.9 percent to 10.86 yuan. Poly Real Estate rose 2.6 percent to 23.05 yuan.
The Shanghai A-share index rose 11.41 points, or 0.38 percent, to 2,994.48 on turnover of 110.7 billion yuan, while the Shenzhen A-share index shed 4.69 points, or 0.45 percent, to 1,032.51 on turnover of 60.8 billion yuan. The Shanghai B-share index was up 0.10 points, or 0.05 percent, at 199.20, while the Shenzhen B-share index rose 1.54 points, or 0.31 percent, to 507.92.
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