China stocks up 2.6% as IPO money floods back

The benchmark Shanghai Composite Index surged 2.64 percent on Friday, boosted by the return of money from a huge IPO and by a spectacular listing by drilling and oil equipment firm China Oilfield Services.
The Index ended the day at 5,552.301 points, after hitting a fresh all-time high of 5,560.417. Friday's close left it up 106 percent since the start of this year.
Gaining Shanghai stocks far outnumbered losers by 783 to 60. Turnover in Shanghai A shares was 137.6 billion yuan (US$18.3 billion), which was moderate but still sharply higher than Thursday's two-month low of 95.1 billion.
China Oilfield Services almost tripled from its initial public offer price to close at 39.90 yuan, far exceeding analysts' expectations of a jump of 50 percent. That left it at a premium of over 130 percent to its Hong Kong-listed H shares, one of the biggest premiums for a dual-listed share.
The stock will only be included in the index in mid-October, but its strength improved sentiment throughout the market.
Analysts said its dramatic debut was partly due to its near-monopoly position in China's booming drilling sector, but its listing was also perfectly timed to attract money flooding back into the market after the IPO of Shenhua Energy.
Shenhua, China's top coal producer, drew a record 2.66 trillion yuan in subscriptions early this week and when the money from unsuccessful retail applications was unfrozen on Friday, some of it immediately returned to the stock market.
"The market was so strong today and there was so much money - I expect the index will just continue rising," said Wu Feng, analyst at Tianxiang Investment Consulting.
Some traders are talking of 6,000 or 6,500 points being hit by the end of this year.
Others, however, said Friday's moderate turnover showed many investors remained cautious about holding stocks over the holiday week starting next Monday.