Markets build on rally, changing economic winds buffet small caps

Stock markets in Shanghai and Shenzhen pulled ahead for a third consecutive day Wednesday, although headwinds from small-cap losses kept overall gains in check.

The Shanghai Composite Index rose 3.28 points, or 0.15 percent, to close at 2,241.27; while the Shenzhen Component Index advanced 39 points, or 0.45 percent, to finish at 8,675.63.

The ChiNext index, which tracks China's NASDAQ-style growth enterprise board, ditched 3.39 percent, or 42.88 points, to close at 1,220.70. Meanwhile, the small and medium-sized board index decreased 1.71 percent, or 86.62 points, to end at 4,964.75.

Combined turnover climbed to 347.6 billion yuan ($56.80 billion), up from Tuesday's 328.9 billion yuan.

Heavy industrial sectors, including steel and shipping, were the biggest winners Wednesday; while Internet, mobile gaming and online education stocks posted most of the steepest tumbles.

"Capital is flowing out of small growth companies as investors are becoming more confident in larger enterprises which are better positioned to benefit from China's improving economy," Guo Yiming, a senior analyst from Shaanxi?Jufeng?Investment?Information?Co, told the Global Times Wednesday.

China's Minister of Science and Technology, Wan Gang, said that the State Council has approved plans to promote the development of the new energy automobile sector, the 21st Century Business Herald reported Wednesday. This was good news for carmakers, particularly those with a footing in the alternative drive market. BYD Co Ltd and Shenzhen Auto Electric Power Plant Co both surged by the 10-percent daily limit to 41.71 yuan and 30.14 yuan respectively.

Sany Heavy Industry Co climbed by the daily limit to 8.60 yuan.

Shandong Iron and Steel Co also attained the limit to finish at 1.98 yuan.