By Li Zengxin (www.chinadaily.com.cn)
Updated: 2007-07-20 12:07

Chinese stocks shrugged off worries of tightening monetary policy evidenced by a slight decline yesterday, and marched strongly upward this morning.

The Shanghai Composite Index closed at 3,989.93 by the noon break, up 76.99 points or 1.97 percent from yesterday's closing. Opening higher at 3,918.41, the benchmark index surged upward in waves, expect for a few setbacks, none of which were deep enough to reverse the trend or return it to the opening level. It almost broke the 4,000-mark by hitting 3,999.72, the highest point of the morning.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, ended the morning strong at 13,197.98, up 3.18 percent. Opening from lower at 12,786.61, it went through the morning within a range of 12,775.15 to 13,258.95.

Real estate shares were the largest gainer this morning. All of the more than 50 stocks surged, led by Shanghai Waigaoqiao Free Trade Zone Development with a 10 percent rise and China Vanke, the largest trader in Shenzhen, climbing 7 percent. Stocks in the retail, wholesale, service, and timber industries were also strong.

According to the National Bureau of Statistics (NBS) yesterday, China's gross domestic product (GDP) grew 11.5 percent to 10,676.8 billion yuan in the first half. The growth rate was 0.5 percentage points higher than that of the same period last year. GDP growth for the second quarter hit 11.9 percent, the highest in 12 years. Trade surplus was 112.5 billion yuan for the first half.

On the other hand, the consumer price index (CPI), a key indicator of inflation, rose 4.4 percent last month, the highest in 33 months. For the first half, CPI rose 3.2 percent, higher than the 3 percent alert line set by the central bank. Food price was the largest inflationary pressure, contributing to 2.5 percent of the total, said NBS. Analysts believe the central bank may raise interest rates again this month to curb excessive liquidity and cool down the investment wave.