Chinese stocks edged up Wednesday, with the main index rising up for the fourth consecutive trading day, but trading volume continued to shrink with the Chinese New Year holiday around the corner.
The benchmark Shanghai Composite Index gained 0.22 percent to 3,149.55 points, with investors largely shrugging off news that the central parity rate of the RMB weakened 265 basis points to 6.8596 against the U.S. dollar Wednesday.
The smaller Shenzhen index gained 0.37 percent to 9,977.96 points. The ChiNext Index, which tracked China's NASDAQ-style board of growth enterprises, rose 0.51 percent to close at 1,870.7 points.
Trading volumes on both bourses continued to decline, with that on the Shanghai exchange dropping to 126.8 billion yuan (18.5 billion dollars) Wednesday from 134.6 billion yuan Tuesday and that on the Shenzhen exchange dwindling to 156.6 billion yuan Wednesday from 171.5 billion yuan Tuesday.
The last few trading days prior to the Spring Festival usually feature thin trading, as some investors have left early for the Spring Festival holiday week and some are reluctant to take out fresh positions.
The Spring Festival, or Chinese Lunar New Year, falls on Jan. 28 this year. Thursday marked the last trading day before the Spring Festival.
The market saw a selloff from some investors in the afternoon trading session Wednesday, but the indexes reversed the decline before the close, evidence that investors' sentiment largely remained stable, said Sun Xiwei, chief investment strategist at CITIC Securities.
"Most investors do not expect negative news in the pipeline during Spring Festival, while sectors related to the military and state-owned enterprise (SOE) reforms may attract investors' attention in the Lunar New Year," Sun told Xinhua.
Policymakers have pledged to take substantial steps in reforming SOEs in electricity, oil, natural gas, railways, civil aviation, telecommunications and military industries.
Gains were made by some heavyweights Wednesday. China's largest aluminum producer Aluminum Corporation of China jumped 3.32 percent to 4.98 yuan per share. China Eastern Airlines rose 1.75 percent to 6.99 yuan apiece.
Chinese stock market in the Lunar New Year might also be adversely affected by external downside risks and black swan events including a possible decline of the U.S. Dow Jones Industrial Average from the current plateau at roughly 20,000 points, Sun cautioned.
The Dow Jones Industrial Average Tuesday rose 0.57 percent to 19,912.71 points.
