Shanghai shares/close -- 3 (NPC produces few positive leads: dealer)

Hong Kong-Macau Investment Information dealer Tang Jie said Shenzhen's B-shares saw maximum gains for a fifth consecutive trading day, while Shanghai's B-shares dropped from their initial highs amid profit-taking. "The Shenzhen market saw a large inflow of fresh funds from Hong Kong, while domestic investors dominated the Shanghai market. "In addition, Shenzhen's B-shares only posted 64 pct growth last year, while Shanghai's B-shares grew by more than 100 pct. That's why Shenzhen's B-shares still have more growth potential." Tang said many A-share investors were sidelined awaiting leads from the plenary session of the National People's Congress, adding that news from the NPC has so far produced mostly negative leads, with few positive ones. "From Premier Zhu Rongji's speech, we can see that the government will continue to support state enterprise reforms, tapping the stockmarket for funds. This means the pressure of fund raising on liquidity is not going to ease this year" he said, adding that the government has pledged to encourage the listing of state firms. Tang also said that investors are concerned about the emphasis placed during NPC speeches on the establishment of social security funds. The establishment of these funds may herald the launch of a policy of floating listed companies' state shares, which is also likely to pressure A-share liquidity and prices, he said. On its first day of trading, Nanjing Textiles closed at 17.18 yuan, up 9.06 yuan from its issue price of 8.12 on volume of 36.1 mln shares. Shanghai Automotive gained 0.43 yuan to 12.77 on 29.9 mln shares, while Dongfeng Automobile lost 0.16 yuan to 9.13 on 9.4 mln shares. Nanjing Iron & Steel gained 0.33 yuan to 10.06 on 8.6 mln shares, while Wuhan Iron & Steel rose 0.15 yuan to 7.04 on 7.8 mln shares and Baoshan Iron & Steel added 0.02 yuan to 5.61 on 24.4 mln shares.

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