Chinese shares closed up 3.06 percent on Thursday as steel, metal and textile stocks regained ground after the government unveiled plans to increase export tax rebates, dealers said. The Shanghai Composite Index, which covers A and B shares, rose 70.15 points to 2,361.70 on turnover of 142.1 billion yuan (20.8 billion dollars).
The key index reached its highest level since February 16, when it rose to 2,389.39. "We expect the A-share market to continue the upward trend due to plentiful liquidity, driven by the persistent expectations for a domestic economic recovery," Amy Lin, an analyst at Capital Securities, told Dow Jones Newswires.
Shanghai-based companies led the gains after Chinas State Council vowed to accelerate the citys development and help it become an international financial centre and shipping hub by 2020. Shanghai International Port (Group) hit the 10 percent daily trading limit at 4.94 yuan and Shanghai-based China Eastern Airlines also rose 10 percent to 6.04 yuan.
Companies in the textile and apparel, steel, non-ferrous metal, petrochemical, information technology and light industry sectors also rose after Beijing said Wednesday it will raise export tax rebates for the sectors. Textile products maker Sunvim Group rose by the daily limit to 7.43 yuan and Baoshan Iron and Steel was up 2.3 percent at 5.75 yuan.
Better-than-expected earnings from Industrial and Commercial Bank of China (ICBC) and China Life Insurance boosted their shares and other financial companies. ICBC rose 5.8 percent to 3.99 yuan after it posted Wednesday a 36 percent rise in 2008 net profit. China Life closed up 2.7 percent at 22.72 after it reported Wednesday a 45 percent drop in 2008 net profit.
The Shanghai A-share index rose 73.61 points, or 3.06 percent, to 2,478.91 on turnover of 141.7 billion yuan, while the Shenzhen A-share index gained 17.94 points, or 2.25 percent, to 814.73 on turnover of 62.1 billion yuan. The yuan closed the day at 6.8320 against the US dollar, down from Wednesdays finish of 6.8309. The Shanghai B-share index added 4.89 points, or 3.23 percent, to 156.00, and the Shenzhen B-share index rose 5.63 points, or 1.65 percent, at 347.53.