China's stock market surged almost 1.5 percent to a record high on Monday, led by steel companies, as investors once again largely ignored weakness in global share markets due to the US subprime mortgage squeeze.
The Shanghai Composite Index climbed 1.48 percent to a record finish of 4,628.108 points, just off an all-time, intra-day high of 4,629.968 hit several minutes before the close.
China remains largely immune to global contagion because foreign investment is a tiny fraction of market capitalisation, and since Chinese banks are believed to have minimal if any exposure to the US credit problems, analysts say.
"The US and Hong Kong markets did not have much effect, though they caused some volatility during early and late trading," said Zhou Fengwu, analyst at Orient Securities. Gaining Shanghai stocks outnumbered losers by 635 to 222. Turnover in Shanghai A shares was an active 166.2 billion yuan ($22.0 billion), though down from Friday's 171.8 billion.
The market is up 30 percent from July's intra-day low and 73 percent from the start of this year, and its refusal to suffer any significant pull-back in recent weeks has convinced some analysts that it may be heading much higher in the short term.
"I think there is a very strong possibility the market will rise to 5,000 points by late August or early September, despite talk of possible corrections," said Chen Jinren, analyst at Huatai Securities.
July consumer price inflation, due to be announced next Monday, has the potential to hurt the market as many analysts expect a figure of at least 5 percent, up from June's 33-month high of 4.4 percent. Wuhan Steel, due to report earnings this Thursday, climbed 8.13 percent to 14.49 yuan.
Guangzhou Iron and Steel jumped its daily limit of 10 percent to 7.89 yuan. Its parent group has agreed to form a joint venture with Japanese steel giant JFE Holdings Inc to build a plant in southern China involving total investment of 6.3 billion yuan, the official Shanghai Securities News reported.
Top global shipping container maker China International Marine Containers soared 10 percent to 32.12 yuan after saying it had bought a controlling 42.18 percent stake for US $145 million in Hong Kong-listed Enric Energy Equipment. It will now make a US $199 million general offer for shares it does not already own in Enric.
Most financials were sluggish but still greatly outperformed their H shares in Hong Kong, where US credit worries hurt the entire bank sector. Bank of China plunged 3.83 percent in Hong Kong but rose 0.18 percent in Shanghai.
Overall, already-massive gaps between A shares and H shares continued to grow because of the foreign market jitters. The index tracking the premiums showed the average premium climbed to 64 percent on Monday from 55 percent on Friday and 33 percent when the index was launched on July 9.
Jiangxi Copper jumped 10 percent to 35.23 yuan after gaining 7.48 percent on Friday on news that it had won conditional approval from regulators to offer new A shares in a private placement expected to raise more than $500 million.