Chinese shares rose on Friday, led by airlines on renewed merger speculation, though turnover remained low because of concern about government policy and a heavy IPO schedule. Foreign currency-denominated B shares soared on the view that cheaper valuations made them safer than A shares.
The Shanghai Composite Index ended the day up 0.73 percent at 5,312.182 points, as gaining Shanghai stocks outnumbered losers by 567 to 276. But turnover in Shanghai A shares remained modest at 149.2 billion yuan ($19.8 billion) against Thursday's three-week low of 139.8 billion yuan.
After this week's news of inflation at a new 10-year high, investors expect an interest rate hike as soon as after the close on Friday, and further monetary tightening in coming months.
Reflecting concern about A-share valuations, the Shanghai B-share index surged 5.72 percent. The B shares of Jiangling Motors climbed 4.68 percent to HK$11.85, for example, even as its A shares slipped 0.30 percent to 23.24 yuan. There was also renewed speculation that A- and B-shares might be merged, to the benefit of B-share holders.
Steel stocks were strong on Friday, with Baoshan surging 6.39 percent to 19.80 yuan on signs of firm domestic steel prices. Airlines soared, with Air China, China Southern Airlines and Shanghai Airlines all jumping their 10 percent daily limits on a flurry of buying in the afternoon. The banking sector was the biggest loser due to valuation worries, with Bank of Communications down 1.38 percent to 13.58 yuan.