China's shares ended higher yesterday as a move to allow brokerages to issue bonds galvanized a liquidity-strapped stock market, brokers said.

The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, climbed 1.96 percent to 1,449.816 points.

From October 8, securities houses that maintain paid-up capital of more than 500 million yuan (US$60.41 million) can apply to issue bonds to raise cash, according to rules published by the China Securities Regulatory Commission.

"The long-awaited policy has given a boost to investor confidence as it will help ease the liquidity crunch of the entire market," said an analyst Zhang Yun from Shanghai.

A wave of negative factors such as a tightening of bank loans has deterred inflow of liquidity, keeping markets weak, analysts said.

"Positive factors aided a technical rebound, after steep falls over the past week helped ease selling pressure," Zhang said.

Brokers said shares in companies that had listed recently and reported good half-year results outperformed.

Zhongjin Gold Co, which listed in mid-August, was among the top gainers and most active counters in Shanghai, surging 9.99 percent to 9.58 yuan (US$1.16).

China's first gold firm to list shares reported on Friday its first-half net profit rose 10.6 percent year on year.

Hainan Airlines, owned partly by global financier George Soros, was the only loser on the Shanghai B share market, dropping 1.16 percent to US$0.510.

The carrier said on Friday it posted a second-half loss of 980.64 million yuan (US$118.5 million), battered by the SARS outbreak.

The Shanghai B-share index rose 2.42 percent to 102.627 points yesterday, while its Shenzhen counterpart edged up 1.72 percent to 229.42.

On the foreign exchange market, China's yuan ended one notch firmer versus the US dollar at 8.2770 yesterday, at the stronger end of its trading range.

The central People's Bank of China enforces a trading range of 8.2760 to 8.2800.

Turnover was a decent US$620 million, up from US$610 million on Friday.

The yuan weakened yesterday to 7.0944 against 100 Japanese yen from 7.0633, and softened versus the euro to 9.0900 from 9.0075.

In the futures market, Shanghai copper futures clambered higher yesterday following the rise in the London Metal Exchange (LME).

The most active January copper contract rose 180 yuan (US$21.7) to 17,990 yuan (US$2,173) a ton, with 27,818 lots traded.

Traders expect the market will remain on an upward trend in the short term, with boosted confidence.

LME copper was holding firm in Asian trading yesterday, supported by Chinese buying. LME three-month copper rose US$32 to end at US$1,766 a ton in yesterday's kerb trade.

LME aluminium futures inched up to US$1,429/US$1,432 per ton, down from Friday's kerb close at US$1,433. In contrast, Shanghai aluminium futures rose a tad. The most active December gained 30 yuan (US$3.6) to 14,640 yuan (US$1,768) per ton.

(China Daily September 2, 2003)