Subsidies a ray of sunshine for market

SHANGHAI'S key stock index rose yesterday, led by the solar energy sector, after the government announced subsidies to solar researchers.

The benchmark Shanghai Composite Index added 0.54 percent to close at 2,374.44. Turnover rose to 162.37 billion yuan (US$23.88 billion) from 142.1 billion yuan the day earlier.

The local benchmark index gained an accumulative 4.09 percent this week with a turnover of 736.77 billion yuan.

"The government's subsidy to fund solar projects boosted the solar energy sector," Ping An Securities Co wrote in a research note yesterday. "But the index will meet resistance at 2,402.81 points. The market is expected to experience corrections and turbulence."

Baoding Tianwei Baobian Electric Co surged by the 10 percent daily limit to 31.28 yuan after the Ministry of Finance said it will offer a subsidy this year of 20 yuan per watt for solar projects with a generating capacity of at least 50 kilowatts. Wuhan Linuo Solar Energy Group Co also jumped 10 percent, to 10.35 yuan.

Steel producers gained as steel futures were launched on the Shanghai Futures Exchange yesterday. Baoshan Iron & Steel Co, the country's largest steel maker, rose 3.48 percent to 5.95 yuan. Wuhan Iron & Steel Co soared 8.68 percent to 7.64 yuan, and Angang Steel Co rose 4.07 percent to 8.69 yuan.

Steel sector rallies cannot be sustained as high steel inventories will stave off price rises, said Wan Bing, an analyst at GF Securities Co.