Shanghai shares rebounded yesterday on optimism of an influx of funds into the market, after a media report said that more than 100 billion yuan (US$12 billion) is in the pipeline as part of efforts to bolster the sluggish stock markets.

The Shanghai Composite Index, which covers both yuan-denominated A shares and hard-currency B shares, rallied 3.43 percent to 1,046.16, the biggest gain in a single session since June 8 when the benchmark soared 8.21 percent to 1,044.18. The A-share Index advanced 3.44 percent to 1,098.99, and the B-share Index added 2.31 percent to close at 61.27.

"The rebound is a reaction to a series of market-boosting measures to be introduced by the government," said Wei Wei, a trader with West China Securities Co Ltd.

The extended QFII (qualified foreign institutional investor) quota and the funds managed by banks, which will enter the market soon, are expected to bring 100 billion yuan in total to the market, China Business News said, citing an unnamed fund management firm's analyst.

Xinhua news agency reported on Monday that overseas investors will soon be allowed to buy more stocks as the quota will be raised to US$10 billion from the original US$4 billion.

"These moves will boost the market's liquidity, and will be helpful to restore investors' confidence,” according to Wei.

(Shanghai Daily July 13, 2005)