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Coal firms, profit makers lift China shares

SHANGHAI: China's shares closed higher on Monday, led by the coal sector, as investors believe a prolonged war in Iraq will lift oil prices and encourage greater use of coal in the country, brokers said.

Shanghai's hard currency B share index nudged up 0.67 percent to 122.465 points, while Shenzhen's rose 1.5 percent to 203.07.

Coal-maker Zhengzhou Coal Industry & Electric Power Co was the best A share performer in Shanghai, rising almost its daily limit of 10 percent to 8.17 yuan.

Global oil prices have been volatile in the run-up to and during the Iraq war. Expectations of a drawn-out conflict led most Chinese investors to believe that firm global oil prices could go still higher, analysts said.

"Rallies in coal counters reflected punters' concern that high oil prices might push more users to choose coal," said Yu Xiaoli, an analyst at Huatong Securities.

Yu also said she expected the overall Shanghai market to hover around 1,500 points in the short run as market sentiment remained cautious during the annual corporate reporting season.

The benchmark Shanghai composite index, which groups both B and A shares, rose 1.25 percent to 1,510.578.

"But it is unlikely the composite index would fall below the psychologically important 1,450 point-level again as firms with good earnings will give support to investors' confidence to the broad market," she said.

On Monday, investors favoured firms that posted a rise in their 2002 earnings.

Sinopec Corp, China's number two oil producer, reported a 0.34 percent rise in its 2002 net profit on Sunday, countering analyst predictions of a fall.

Its A shares rose two percent to 3.60 yuan with 43.4 million shares changing hands -- Shanghai's second most active stock.

Another heavyweight Pudong Development Bank, in which US financial giant Citigroup Inc has invested, also outperformed the market with a 1.9 percent rise to 11.15 yuan.

The lender posted a 21 percent year-year rise in 2002 net profit on Saturday.

Shanghai's yuan-denominated A share index gained 1.26 percent to 1,579.797 points while its Shenzhen counterpart rallied 1.10 percent to 446.97.-Reuters