Chinese stocks rose on Wednesday, led by financials such as Merchants Bank and Ping An Insurance as a rebound from technical support continued. The Shanghai Composite Index ended up 2.26 percent at 4,334.047 points after touching a high of 4,360.700, bringing its gains over the past two days to 3.39 percent.
The recovery has been aided by intervention by the securities regulator, which indicated late on Monday that it would block big share issues that could further worsen the market's supply/demand balance.
The index began rebounding on Tuesday from around chart support at 4,165, the 38.2 percent retracement of its bull run from June 2005 - the second time this month it bounced from there.
Helping sentiment on Wednesday was strength in Merchants Bank, which climbed 4.87 percent to 31.84 yuan. About 2.5 billion A shares of the bank became tradable on Wednesday as a lock-up period related to reform of its state shareholding structure expired, and investors were pleased that this did not trigger significant selling. Ping An rose 5.56 percent to 71.82 yuan, continuing Tuesday's rally on expectations it would scale back or delay its 120 billion yuan share offer after the regulator's warning.
Pudong Development Bank gained 0.32 percent to 40.62 yuan. Sources familiar with the situation told Reuters on Tuesday night that the bank's board had approved a plan to issue under a billion new A shares, but would try to make this attractive for shareholders by paying a dividend of 3 yuan per 10 shares when it distributed its 2007 profits.
Rising stocks in Shanghai far outnumbered losers by 823 to 79. But turnover in Shanghai A shares was a thin 82.7 billion yuan ($11.6 billion), down from Tuesday's 89.5 billion yuan.