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Rising Shanghai and Shenzhen A-share Markets Boosts Base Metals Prices 

Laterite Nickel Ore Reference Prices by Region (2010-8-18)

SHANGHAI, Aug. 18 (SMM) &ndash; Shanghai and Shenzhen A-share markets have been rising from the beginning of this week. Shanghai Stock Exchange Composite Index (SSE Composite Index) advanced nearly 60 points, and Shenzhen Stock Exchange Component Index (SZSE Component Index) soared about 370 points. After returning 2,600 points, SSE Composite Index still has a further upward room due to strong long positions. SMM believes that Shanghai and Shenzhen A-share market will climb higher amid a general optimistic market sentiment, and this will in turn help base metals market advance further.
China Everbright Bank Makes Strong Shanghai Debut, Agricultural Bank of China Moves Steady after Green-Shoe Mechanism 
China Everbright Bank (CEB) surged on its Shanghai stock market debut on Wednesday, and Everbright Bank&rsquo;s shares opened at RMB 3.37, and closed the morning session up 16.77% at RMB 3.62, well above a RMB 0.02 gain of the Agricultural Bank of China&rsquo;s shares on its debut, and also better than market projections. According to its previous announcement, a total number of 900 million shares were allotted for public investors, and the total issuing volume could reach 7 billion shares if the over-allotment options are exercised. The strategic share allotment, off-line allotment, and on-line share allotment of the IPO amounts to 3 billion shares, 1.55 billion shares, and 2.45 million shares. As the second to go public in the banking sector so far this year, Everbright Bank&rsquo;s debut is being watched closely, and its strong performance on Wednesday boosted market confidence. As the Agricultural Bank of China&rsquo;s green-shoe option expired on August 16th, the lender&rsquo;s shares succeeded to hold at the IPO price of RMB 2.68, though the shares only struggled not to fall below the level in nearly 2 trading days. Based on technical analysis, there is low possibility that the lender&rsquo;s shares will drop below the IPO price, and this will inject more confidence into the Shanghai and Shenzhen stock markets.
Equity Fund Positions Grow Continuously 
According to the forecast generated by DZH's relevant models, average positions of 319 equity open-end funds covered by the statistics were 74.48% last week, up 2.06% compared with 72.42% a week earlier, with average positions of equity funds and mixed funds reported at 79.32% and 67.97%, respectively, up 2.34% and 1.68% from a week earlier. The rising fund positions indicate fund managers' optimism toward market outlook, and also reflect current equity market sentiment attracts the focus of mainstream funds. Recently, securities markets have drawn more and more attention from various kinds of investors in China amid growing inflationary pressure.&nbsp;
Base Metal Prices Rebound Robustly 
SHFE base metal prices have been advancing constantly along with bullish sentiment in Shanghai A-share market and other financial markets, and with strong speculation. SHFE copper for delivery in three months totally climbed by RMB 1,030/mt to RMB 58,360/mt so far this week (morning session, Wednesday, Shanghai), SHFE aluminum for delivery in three months advanced by RMB 60/mt to 15,595/mt, and SHFE zinc for delivery in three months rose by RMB 545/mt to RMB 17,800/mt. SMM believes recent strong movements on Shanghai and Shenzhen A-share markets have eased concerns over possibility of price slips, and long position sentiment has been further boosted in response, pushing up SHFE base metal prices. Currently, base metal market is dominated by bullish sentiment, and yesterday&rsquo;s stronger advance of LME base metal prices further adds investor confidence, helping this round of price rebound go sustainable. However, base metal prices still have pressure to break through previous highs and will inevitably fluctuate around the existing level. In this context, fluctuation range of base metal prices may widen in the short term.
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