Investors eye more measures

By Fu Chenghao  |   2008-12-8  |     NEWSPAPER EDITION

SHANGHAI stocks may climb in anticipation that more government measures would be rolled out to support the Chinese economy.

Investors are likely to keep a close eye on the annual Central Economic Work Conference that takes place between today and Wednesday for any sign of more measures which might be taken to sustain growth.

Analysts said investors had factored in this possibility as the key Shanghai Composite Index jumped 7.88 percent to 2,018.66 points last week. The market's strong performance was also due to a State Council meeting which emphasized the importance of a stable stock market as it unveiled a basket of measures to shore up economic growth through financial tools.

"In the short term, the market has further room to rise," said Everbright Securities analyst Teng Yin, who forecast the index to move between 1,950 and 2,050 this week. But Teng said if the work conference fails to produce further positive measures, the impetus may fade and the index could face technical resistance at its 60-day moving average, or 2,010 points.

Shenyin Wanguo Securities strategist Qian Qimin said he saw strong speculative buying by retail investors behind last week's active trading, while the main institutional investors remained cautious.

He cited November economic data due for release in the middle of this month which would likely be poor and the influx of new shares that would be tradable after their lock-up periods expire as potential negative factors that will weigh on the market.

Qian expects the index to move between 1,900 and 2,100 this week.