Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200812/20081222/article_385382.htm
More gains likely this week
Created: 2008-12-22 0:47:17
Author:Fu Chenghao
SHANGHAI stocks may continue to rise after gaining last week, but analysts cautioned that pessimism over the economic outlook would prevent any big jump in the mid term.
The key Shanghai Composite Index soared 3.29 percent to end at 2,018.46 last week, led by banks and property developers, in anticipation the central government would cut interest rates, as well as airlines after China slashed jet-fuel prices by 32 percent to 5,050 yuan (US$738) a metric ton last Friday.
The market also gained on talk that government-controlled investment vehicle Central Huijin Investment Co had continued to buy more blue chips after purchasing shares in top banks in September to bolster the market, which has plunged nearly 62 percent this year.
"That's a mainly policy-driven rise," Everbright Securities analyst Teng Yin said in a note. "The market is in a tussle between such policy incentives and expectations and worse-than-expected macro°?economic data."
Official data has shown China's economic slowdown is worsening, worrying investors over corporate earnings and stock fundamentals, Teng said. Slowing exports forced the closure of 8,513 companies in Guangdong Province in October, more than the total amount of closures in the first three quarters, Xinhua news agency said over the weekend.
Some fund managers may turn to window-dressing, which would push up share prices, as the year-end nears. Window-dressing is a strategy to improve the appearance of portfolio performance before presenting to clients.
But analysts said an influx of new shares, which will become tradable this week after their lock-up periods expire, may also affect the market.
The key Shanghai Composite Index soared 3.29 percent to end at 2,018.46 last week, led by banks and property developers, in anticipation the central government would cut interest rates, as well as airlines after China slashed jet-fuel prices by 32 percent to 5,050 yuan (US$738) a metric ton last Friday.
The market also gained on talk that government-controlled investment vehicle Central Huijin Investment Co had continued to buy more blue chips after purchasing shares in top banks in September to bolster the market, which has plunged nearly 62 percent this year.
"That's a mainly policy-driven rise," Everbright Securities analyst Teng Yin said in a note. "The market is in a tussle between such policy incentives and expectations and worse-than-expected macro°?economic data."
Official data has shown China's economic slowdown is worsening, worrying investors over corporate earnings and stock fundamentals, Teng said. Slowing exports forced the closure of 8,513 companies in Guangdong Province in October, more than the total amount of closures in the first three quarters, Xinhua news agency said over the weekend.
Some fund managers may turn to window-dressing, which would push up share prices, as the year-end nears. Window-dressing is a strategy to improve the appearance of portfolio performance before presenting to clients.
But analysts said an influx of new shares, which will become tradable this week after their lock-up periods expire, may also affect the market.
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