China stock market rises 97% in 2007

China’s benchmark stock index today ended 2007 trading having soared nearly 97% during the year to become the world’s best-performing major index.

Despite the strong gains, worries that Chinese authorities will lift interest rates to cool the market caused the Shanghai Composite to fall 0.9% to 5,261 on the final day of the trading year.

Concern about measures to rein in growth are likely to hold back market gains next year, analysts said.

Gui Haoming, chief strategist of Shenyin & Wanguo Securities, said: “We expect the stock market will go up in 2008, but the magnitude of the growth will be less than that of 2006 and 2007.

The economy will keep growing but there is uncertainty about the government’s macro-economic control.”

The 97% improvement masks a volatile year for China’s stock market, which included a near 9% plunge in the Shanghai index in late February that sparked a brief sell-off in global markets.

While the Shanghai index surged 96.7% over 2007, it has also fallen about 14% since hitting a record high of 6,124.04 in mid-October.

Financial firms fell today on concern that Beijing might announce new monetary tightening measures over the long holiday weekend.

The government is trying to keep the fast-growing economy, which is expected to expand by more than 11% this year, from igniting inflation or a debt crisis and has raised interest rates repeatedly and tightened access to credit.