Market edges up as tax-cut plan boosts retailers

SHANGHAI'S key stock index was slightly higher today, led by gold miners and retailers while banks were weak on concerns about a possible decline in property prices.

The benchmark Shanghai Composite Index was up 0.27 percent, or 8 points, to close at 3,007.04. Turnover fell to 144.9 billion yuan (US$ 22.2 billion) from yesterday's 167.9 billion yuan.

"Shanghai's stock market today joined with a recovery of the global market from the panic about a possible downgrade of the United States' sovereign debt credit," said Zhang Gang, an analyst with Central China Securities. "But tradings are thin and investors are still cautious."

He predicted that low valuation of the shares will support the index to fluctuate around 3,000 points in the near future, but significant gains are not likely under concerns for tighter policies.

Retailers gained on speculation that spending will boom. The Standing Committee of the National People's Congress today reviewed a proposal to raise the monthly personal income tax deduction to 3,000 yuan and trim tax brackets to cut the burden on low and middle income groups. Shanghai Bailian Group Co jumped 5.9 percent to 15.54 yuan.

Gold miners rallied after gold bullion prices hit a record high of US$1,499.2 per ounce in New York overnight. Zhongjin Gold Mining Group Co jumped 4.9 percent to 39.57 yuan. Zijin Mining Co was up 2.9 percent to 8.17 yuan.

Banks were mixed after Liu Mingkang, head of China Banking Regulatory Commission, yesterday ordered banks to conduct another round of stress test on real estate loans to gauge the impact of a possible decline in housing prices.

China Merchants Bank dropped 1.3 percent to 14.64 yuan. Industrial and Commercial Bank of China was unchanged at percent to 4.56 yuan.

The property sector fell. China Vanke, China's largest property developer, was down 1.7 percent to 8.63 yuan. Poly Real Estate Co shed 4 percent to 13.76 yuan.

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