Growth slows but stocks continue downhill slide

By Ding Yining and Wang Yanlin  |   2008-7-18  |     NEWSPAPER EDITION

SHANGHAI stocks continued to drop yesterday despite the National Bureau of Statistics announcing slowed economic expansion in the first half, as expected, showing the economy was not overheating.

The Shanghai Composite Index retreated in the second half of trading to end at 2,684.78 points after climbing to 2,773.28 points in the morning. It edged down 0.78 percent, or 21.09 points, from the previous trading day.

Losers outnumbered gainers 580 to 269, and 58 remained unchanged. Turnover shrank to 51.45 billion yuan (US$7.55 billion) from Wednesday's 60.36 billion yuan.

China's gross domestic product in the first six months reached 13.06 trillion yuan, a 10.4-percent increase from the same period last year. The slowed pace exempted the country from worries of an overheated economy, the National Bureau of Statistics said yesterday.

The Consumer Price Index of the first half increased by 7.9 percent while June's inflation was up 7.1 percent, lower than May's 7.7 percent. The market still faces the uncertainty of rising prices, lagging rural incomes and turmoil on the global market.

"High CPI and the turmoil in the Shenzhen real estate market was a strong blow to the market although other statistics announced by the Bureau of Statistics were actually good news," said Zhang Yong, an analyst with Greatwall Securities. "Tough macro-control will continue in the second half despite the lifting of regulations in a few sectors such as the textile industry," he added.

Dai Ming, an analyst with the Kingsun Investment Management Co, said: "The stock market responded positively in the morning when the data were just released. But the country may stick to a tight monetary policy, which shook the investors' confidence and led to the downturn of the indices again."