China Ping An shares up 10 pct, market jumps

Shares in Ping An Insurance <601318.ss> rose their 10 percent daily limit on Thursday, pulling up other insurers and the overall stock market in heavy trade, as Ping An rebounded from a slide caused by its $17 billion fund-raising plan.

Shareholders approved the controversial plan on Wednesday, while the stock was suspended.

The announcement of the plan in mid-January hurt both the stock and the market, because of the dilution to earnings and fears that the market might not be able to absorb such a large issue.

But traders said Ping An had dropped so much since then, from 98.21 yuan to an intra-day low of 65.01 yuan in late February, that the risk of further falls had decreased greatly.

Also, Ping An's equity issue still needs approval by the securities regulator, which has warned companies against large fund-raisings that could hurt the market. Investors believe it may delay or force a moderate reduction of the equity sale.

"Maybe this is a sign that the overall market is bottoming out. People are now saying Ping An has dropped too much," said Chen Jinren, analyst at Huatai Securities, though he added that some investors remained ready to sell on rallies, and that the stock was not necessarily starting an extended recovery.

Ping An's strength triggered a surge in other insurance stocks. Its bigger rival China Life Insurance <601628.ss> was up 6.71 percent to 39.59 yuan, while China Pacific Insurance (Group) Co <601601.ss> gained 6.62 percent to 37.50 yuan.

The Shanghai Composite Index <.SSEC> jumped 3 percent in the late morning in response to the insurers' rally, though it came off its highs to stand up 2.27 percent at 4,390.254 points at midday.