By Zheng Buchun
A-shares increased across the board Monday with rising trading volume. Shanghai Composite closed 1.18% higher at 3239.96 points, rebounding to a record high since the mid of last month. It is largely due to the strong performance of banking shares. Other indexes also moved up, but not to the level as what Shanghai Composite did.
Banking shares were boosted by many factors. Specifically, credit starts to expand as China's economy stabilizes, which may in turn help reap more profits for banks. Last weekend, the number of infrastructure projects proposed by local governments has amounted to surprisingly high. The strong performance of Hong Kong stocks also positively affected A-shares. Stocks of ZRC Bank plunged 9.09% earlier yesterday but closed 6.23% higher in the end. The strong performance of small banking stocks also helped shore up the stocks of large banks.
Small and medium board and ChiNext also delivered good performances along with the main board. But sub-new stocks are much weaker. In a mid-term perspective, you may downsize sub-new positions and hold more blue chips instead.
China has tightened regulations for secondary offerings, which is bad news for small and medium board, ChiNext, and sub-new stocks. In such case, the way of "private offering-acquisition-story telling or building profits-selling off" will not continue to work in the future.
(Zheng Buchun is NBD's columnist)
Email: tanyuhan@nbd.com.cn