Shares in Shanghai rose for the first time in three days, with the key index going above the 2,700 points, on talk that previous losses might have been excessive, but analysts downplayed the gains and said market prospects are still gloomy.
The Shanghai Composite Index added 1.2 percent to rebound from a four-month low to close at 2,708.81. Turnover fall to 67.3 billion (US$10.23 billion) from Tuesday's 75.58 billion yuan.
The drop in turnover reflected investors' wariness over the market, which has already lost 3.5 percent so far this year following a 14.3 percent tumble in 2010, said Chen Kaiwei, an analyst at Changjiang Securities.
"The market will be flat before the Spring Festival break," Chen said. "But if there's any market rally, it's better to sell and keep less than 50 percent of assets in equities."
The market will close from next Wednesday to February 8 for the Spring Festival.
Irrigation works and water conservancy companies performed firmly yesterday as investors took comfort from a government paper that indicates major investments in the country's irrigation infrastructure in the next 10 years.
China will invest 2 trillion yuan into water projects over the next five years, said Zhou Xuewen, a senior official at the Ministry of Water Resources. Governments at all levels will have to allocate 10 percent of their massive annual land sales receipts to irrigation works and water conservancy, which may exceed 270 billion yuan this year.
Chongqing Three Gorges Water Conservancy and Electric Power Co and Qian Jiang Water Resources Development Co both rose by the daily cap of 10 percent.
