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August 31, 2009

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Fall likely on fear of less funds

THE Shanghai stock market is likely to dip on fears of a shortage of capital as companies look to expand their operations via more financing plans such as additional share issues, analysts said.

The benchmark Shanghai Composite Index lost 3.4 percent last week to end at 2,860.69 points last Friday - the fourth weekly loss in a row. The weekly decline also sent the barometer to a loss of 16.16 percent this month.

A new round of additional share issues and large initial public offerings have taken place, posing more pressure on market liquidity which has taken a hit following sharp declines in bank loans, Minsheng Securities Co wrote in a note.

Investor concerns are growing that the amount of new loans will drop even more than the market expected, said Xu Zheng, an analyst at the brokerage.

Shares will continue to perform weakly, Sinolink Securities Co wrote in a note.


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