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China stocks close up 2% in huge turnover

(Agencies)
Updated: 2009-02-09 15:39

Chinese stocks rose in massive turnover on Monday, extending a week-old rally that began when data implied economic growth might bottom out this quarter. But there was heavy profit-taking in the afternoon as some analysts suggested the rally was not sustainable in the longer term.

The Shanghai Composite Index, which surged 9.57 percent last week, ended up a further 1.99 percent at 2,224.71 points. It hit four-month high of 2,238.89 during the day.

Turnover in Shanghai A shares swelled to a nine-month high of 150.0 billion yuan ($21.95 billion) from Friday's 120.3 billion yuan.

The market's rally was triggered last week by a better- than-expected January purchasing managers' index (PMI), and by a surge in bank lending due to government pressure on banks.

Many analysts think that with institutional and individual investors flocking back to stocks, the uptrend might continue for days or even weeks. Some see the next major technical resistance for the index at the late September peak of 2,333 points.

"A short- and medium-term uptrend has been established and market confidence is continuing to increase, so all kinds of money are entering the market to bet on the uptrend," said Changjiang Securities analyst Song Zhongqing.

But a good number of analysts believes the optimism may prove excessive in the longer term.