Market likely to see further swings

By Winny Wang  |   2008-12-15  |     NEWSPAPER EDITION

SHANGHAI stocks are set for more swings this week as investors' expectations about the market are mixed, analysts said.

"Decisions made at the Central Economic Work Conference provided a boost to the stock market and helped it to rebound, but the release of weak economic figures for last month sparked investors concerns over a worsening economy, which in turn led the market to decline quickly," said Yi Xiaobin, an analyst at Galaxy Securities Co.

Following the conclusion of the conference last week, the State Council, or China's Cabinet, issued a statement at the weekend calling for effective measures to stabilize the stock market, including launching a Nasdaq-like growth board. The board aims to assist the development of start-up companies and firms will have a lower listing criteria.

The government would also promote more mergers and restructuring among qualified companies by accelerating the approval process.

Yi forecast the index to move between 1,900 and 2,100 points. The Shanghai Composite Index fell 3.19 percent to 1,954.22 last week.

A total of 536 companies listed in Shanghai and Shenzhen had reported their preliminary earnings by last Thursday, and 237 of them predicted they would suffer losses or their profits would decline for the year.

"Many investors have a pessimistic view of the economy next year, and they believe the macro-economy would be under heavier pressure in the first half of next year," said Liu Jingde, an analyst at Cinda Securities Co.

Wu Dingfu, chairman of the China Insurance Regulatory Commission, last Saturday said 15 percent of insurance funds now could be invested in stocks from a previous 8 percent.