Shanghai A-shares close morning flat; B-shares higher

SHANGHAI (AFX-ASIA) - A-share prices closed the morning flat in mixed trade, as hopes of further gains in hi-tech shares following the strong debut of Beijing UFsoft on Friday were offset by fears of an increase in fund-raising activities, dealers said.

	    While A-shares appear ripe for a correction following several days of gradual gains, hopes of a boost to liquidity once the government proceeds with expected plans to allow the launch of open-ended securities funds continued to underpin sentiment, they said.

	    B-share prices closed the morning higher amid continued strong domestic buying fuelled by hopes of a surge in liquidity from June 1, when domestic individuals gain the right to use foreign currency deposited after February 19 to invest in B-shares, they said.

	    The A-share index gained 2.48 points to 2,299.18 on turnover of 8.89 bln yuan after trading between 2,304.24 and 2,295.61.

	    The SSE-30 index dropped 21.15 points to 4,001.56.

	    The B-share index closed 2.61 points higher at 211.53 after trading between 212.50 and 209.87.

	    The composite A- and B-share index closed 3.00 points higher at 2,206.37 on turnover of 11.74 bln yuan after trading to a high of 2,210.86 and a low of 2,202.74.

	    Qinghai Securities analyst Yan Qing said the strong debut of Beijing UFsoft on Friday points to strong underlying confidence, and has triggered hopes of further gains in new, small-cap and hi-tech shares.

	    On Friday, Beijing UFsoft's shares rose 330 pct to close at 92 yuan, 161 times the company's 2000 earnings per share, and the highest ever price for an A-share.

	    The company's shares closed the morning down 4.1 yuan at 87.9 on 3.4 mln shares.

	    "Although new, small-cap and hi-tech shares are already very high, the high price of UFsoft may have created scope for further gains," Yan said.

	    However, Beijing UFsoft's strong debut may also pave the way for higher prices in subsequent IPOs, and may also lead to an increase in fund-raising activities, as companies see strong demand for new shares.

	    Yan added that he believes a share price of close to 100 yuan is unsustainable, and he expects Beijing UFsoft to continue to drift lower in the near term.

	    While there may also be some pressure for A-shares in general to undergo a correction following several days of sustained gains, downside risk appears limited amid expectations that the government will soon allow the launch of open-ended securities funds, he said.

	    Investors have also become less concerned that the expected launch of a policy of floating state shares in listed firms will have a significant negative impact on the market, he said, adding that he expects the composite index to trade within a range around 2,200 points.

	    Baotou Steel Union rose 0.32 yuan to 7.26 on volume of 49.4 mln shares, while Baoshan Iron & Steel gained 0.07 yuan to 5.55 on 9.3 mln shares.

	    China Minsheng Banking rose 0.4 yuan to 19.9 on 7.3 mln shares.

	    Shanghai Port Machinery gained 0.95 yuan to 18.93 on 3.5 mln shares.

	    Fujian Star Computer rose 0.6 yuan to 15.06 on 2.1 mln shares, while Tsinghua Tongfang shed 0.39 yuan to 30.6 on 1.4 mln shares.

	    Among B-shares, Zhejiang Southeast Electric Power rose 0.016 usd to 0.96 on 7.8 mln shares, while Heilongjiang Electric Power gained 0.007 usd to 0.951 on 6.6 mln shares.

	    Shanghai Lujiazui Finance rose 0.011 usd to 1.039 on 5.4 mln shares.

	    Tianjin Marine gained 0.01 usd to 0.964 on 4 mln shares.

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