Shanghai shares close lower Friday despite solid profit growth

Shanghai shares closed lower on Friday, led by declines in computer and telecommunication firms, despite the solid profit growth of China’s major industrial firms.

The Shanghai Composite Index was down 0.3 percent to close at 2,873.59 points.

For the week, the gauge jumped 1.57 percent as investors were buoyed by a series of positive economic data. The National Bureau of Statistics said on Friday that China's industrial profits have achieved steady growth in the first half of this year.

Profits for China’s major industrial firms rose 17.2 percent from a year earlier to 3.39 trillion yuan (US$496.88 billion) in the first six months, according to data from the National Bureau of Statistics. Profit growth is 0.7 percentage points faster than the 16.5-percent expansion of the January to May period. In June, China’s major industrial firms posted profit growth of 20 percent.

The National Bureau of Statistics said that sound profit growth in the first half of this year is due to the country’s supply-side structural reform, reduction of production costs and improved profitability of industrial companies.

In terms of profit growth, iron and steel providers, building materials and oil exploitation firms are among the biggest gainers.

Li Daxiao, chief economist of Yingda Securities, said that profits of state-owned enterprises and stronger-than-expected industrial growth released earlier this week had a positive impact on the A-share market.

“The profit growth of China’s major industrial firms released by the National Bureau of Statistics on Friday delivered a positive signal to the A-share market. It has a great impact on the performance of blue-chips in the stock market. Listed companies are expected to post good profit results this year,” Li said.

Shandong Hualu-Hengsheng Chemical Co Ltd fell 2.55 percent to 18.31 yuan and Hainan Airlines Holding Co Ltd lost 3.17 percent to 2.44 yuan.