Shanghai shares up on oil and coal

Shanghai stocks rebounded on Friday bolstered by oil and coal mining companies amid profit rallies.

The Shanghai Composite Index added 0.06 percent to 3,353.82 points today.

Oil and coal mining companies led the growth, with Shanxi Coking Co gaining 5.71 percent to 9.25 yuan (US$1.40), and PetroChina Co adding 1.33 percent to 8.40 yuan.

The rebound was bolstered by the gaining profits in these sectors, given China’s 90 major coal companies reaped 104.1 billion yuan in profit from January to September, reversing the losses a year prior, while oil giants such as PetroChina said yesterday they were benefiting from China’s policies to expand abroad, which helps increase profitability.

“Investors were buoyed, trying to more opportunities in sectors boding well, which helps stabilize the stock market,” said Gu Yongtao, strategic analyst at Cinda Securities.

But uncertainties remain high, alarmed analysts such as Gu and Chen Jian, investment consultant at Datong Securities.

Despite the daily rebound today, the Shanghai stock index dipped 0.86 percent over the week, extending the losses a week ago amid a bond rout despite the government’s efforts to help lift liquidity.

Treasury bond yields stayed at multi-year highs over the past two weeks following China’s efforts on deleveraging, which drained liquidity in the stock market, Chen said.

The central bank has tried to increase liquidity by injecting funds into the banking system over the past weeks, which helped the index rebound from Monday to Wednesday, “but  investors should stay cautious, noticing continuously fund flows in the stock market and new financial policies,” said Kang Shuiyue, analyst at Sun Investments, a domestic asset management company.