A day after the US Federal Reserve cut the interests rate by 50 basis points, Chinese stocks began a march to higher price levels. The Shanghai Composite Index finished up 74.8 points or 1.39 percent to 5,470.07, a new record high close.

Turnover of the stocks in the major indices was 216 billion yuan, the lowest this week.

The securities regulator and industrial experts warned that investors should not be "blindly" over-optimistic about possible effects of the US interest cut on the domestic market, as such effects, including the pressure of yuan's appreciation against US dollar, rising prices of oil, gold and scarce natural resources on China's stock market, could be moderate.

The domestic market is facing higher risks on the current levels and the series of upcoming initial public offerings (IPO) by State heavyweights are set to exert substantial downward pressure on the market, said analysts.

Opening higher at 5,408.48, the benchmark Shanghai index took off in the afternoon session after fluctuating modestly for the morning and toughing a low at 5,396.11 by the noon break. It kept on rising to a high of 5,482.43 before turning down a little to the close.

Of the A shares listed in Shanghai, 507 closed up, 263 dropped and 72 remained unchanged. Shanghai Shenda grew 10.05 percent on the top, leading another 27 stocks rising on the maximum growth cap of 10 percent.

The Industrial and Commercial Bank of China, with the largest trading volume, added up 0.1 yuan or 1.54 percent to lift the index up. After gaining 81 percent on a strong debut yesterday, Bank of Beijing, with the largest transaction value, today gained another 8.33 percent to 24.57 yuan.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, opened higher at 18,139.95 and closed 148.4 points or 0.82 percent to 18,221.75. It went through the day within a range of between 18,073.24 and 18,360.24.

Of the A shares, 379 went up, 192 fell and 74 ended flat. China International Marine Containers Group, today's largest trader in terms of transaction value, rocketed 9.27 percent to 34.08 yuan. TCL, also traded actively, closed with a slight drop. Stocks in the media, timber and mining industries were the best performers today, followed by those in construction and finance sectors.

The United States' Federal Reserve decided on August 18 to lower its target for the federal funds rate 50 basis points to 4.75 percent. Analysts believe such a move will boost the global stock, oil and gold markets and increase pressure for the yuan to appreciate against the US dollar.

The US, Australian and almost all the Asian stock markets have been rocketing to new highs on the news. Yesterday Hong Kong's Hang Seng Index went up 977.79 points or 3.98 percent.

The Chinese market dropped a little yesterday but started surging today. However, industrial experts said the positive effect of the interest rate cut of US might be offset by the injection of a slew of large cap stocks aiming to address excessive liquidity in the market.

China Oilfield Service Ltd began online subscription for its 500 million A shares, priced at 12.88 yuan to 13.48 yuan today. The number of shares is lower than the originally expected 820 million. Individual investors may apply for the online portion as of today, with maximum bidding price of 13.48 yuan. The online portion has 325 million shares, accounting for 65 percent of the total.

China Construction Bank announced yesterday that its share price was set at 6.45 yuan, the upper band of the indicative price range. The country's second-largest commercial bank has attracted a record 2.26 trillion yuan of subscription funds in a Shanghai IPO. The price represents a price to earnings ratio of 32.9.

It also means the bank could raise up to 58.05 billion yuan in its IPO and become the largest domestic offering, exceeding Industrial and Commercial Bank of China's 46.64 billion yuan last October in the domestic market in a simultaneous listing in Shanghai and Hong Kong.

China Shenhua Energy Co Ltd, China's largest and world's second-largest coal miner, has kicked off a road-show for its 1.8 billion A-share issuance in Beijing, Shanghai, Guangzhou and Shenzhen yesterday. Hong Kong-listed Shenhua may raise 76 billion yuan from the IPO, calculated by its HK$44 closing price today.

In the meantime, the country is stepping up efforts for its corporate bond market. In its latest move, the Shenzhen Stock Exchange yesterday released a set of detailed rules governing corporate bond issuance. It also set the fee rates for the issuance.

The Shanghai Stock Exchange revised its corporate bond trading rules on Tuesday and lowered the entry limits for companies wishing to issue bonds. The new rules also stipulate the responsibilities of bond credit rating agencies and specify rules for information disclosure.

The China Securities Regulatory Commission (CSRC) has approved China Yangtze Power's application for issuing 8 billion yuan corporate bonds.

China Yangtze, the first listed company to issue corporate bonds after CSRC released a rule governing corporate bond issuance last month, will issue its first batch of five- or 10-year bonds, amounting to 4 billion yuan, as early as this month. The bonds are expected to carry a coupon rate of around 6.2 percent. At the non-discounted issue price, the yield of the proposed China Yangtze bonds would be about 170 basis points above that of treasury bonds, investment analysts said.

In less than one month, twenty firms, including China Vanke, Huaneng Power International, Poly Real Estate Group and Gemdale, have filed applications for corporate bond issuance, the Securities Times reported. These companies may target raising as much as 36 billion yuan for the bond sales, which may further drain the floating capital from the market, analysts said.