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Analyst's advice sends stocks downward at midday
SHANGHAI'S key stock index plunged nearly 3 percent in the morning session after an analyst advised investors to sell yuan-denominated Chinese shares because gains were not backed by fundamentals.
The Shanghai Composite Index tumbled 2.73 percent, or 63.23 points, to 2,256.21 points at 11:30am.
The Shenzhen Composite Index, which tracks the smaller domestic market, was down 1.93 percent, or 14.23 points, to 722.75 points.
While stocks may have "further room to run" before the announcement of various stimulus programs and the annual session of the National People's Congress next month, the rally may not be sustainable as "we do not believe it is supported by fundamentals," wrote Steven Sun, HSBC strategist, in a note yesterday.
Sun advised investors to sell stocks after the benchmark Shanghai Composite Index rose above 2,300 points.
The Shanghai benchmark has rallied 25 percent this year, the best-performing of 90 global stock gauges. The index closed at 2,319.44 yesterday.
Commodities plunged to their lowest level since June 2002. Crude oil fell as much as 8.2 percent, and copper declined the most in three months.
Jiangxi Copper Co, China's biggest producer of the metal, retreated 2.6 percent to 17.58 yuan.
PetroChina Co, the nation's biggest oil company, lost 3.21 percent to 11.44 yuan while China Petroleum & Chemical Corp, Asia's biggest oil refiner, slid 2.19 percent to 8.93 yuan.
Poly Real Estate Group Co, China's second-largest developer by market value said it plans to invest 21.5 billion yuan (US$3.1 billon) in property this year after profit jumped 50 percent last year. Separately, Poly said it may raise up to 8 billion yuan from a private placement of shares. The stock dropped 3.28 percent to 17.7 yuan.
Bucking the downward trend, machinery makers gained with analysts believing construction demand will increase following the Lunar New Year period as companies start work on new projects
Guangxi Liugong Machinery Co, a Chinese maker of construction equipment, rose 1.82 percent to 15.08 yuan. Sany Heavy Industry Co, which makes concrete pumps and road rollers, climbed 1.36 percent to 23.11 yuan.
Changsha Zoomlion Heavy Industry Science & Technology Development Co, which makes heavy construction equipment, gained 5.98 percent to 19.14 yuan.
The Shanghai Composite Index tumbled 2.73 percent, or 63.23 points, to 2,256.21 points at 11:30am.
The Shenzhen Composite Index, which tracks the smaller domestic market, was down 1.93 percent, or 14.23 points, to 722.75 points.
While stocks may have "further room to run" before the announcement of various stimulus programs and the annual session of the National People's Congress next month, the rally may not be sustainable as "we do not believe it is supported by fundamentals," wrote Steven Sun, HSBC strategist, in a note yesterday.
Sun advised investors to sell stocks after the benchmark Shanghai Composite Index rose above 2,300 points.
The Shanghai benchmark has rallied 25 percent this year, the best-performing of 90 global stock gauges. The index closed at 2,319.44 yesterday.
Commodities plunged to their lowest level since June 2002. Crude oil fell as much as 8.2 percent, and copper declined the most in three months.
Jiangxi Copper Co, China's biggest producer of the metal, retreated 2.6 percent to 17.58 yuan.
PetroChina Co, the nation's biggest oil company, lost 3.21 percent to 11.44 yuan while China Petroleum & Chemical Corp, Asia's biggest oil refiner, slid 2.19 percent to 8.93 yuan.
Poly Real Estate Group Co, China's second-largest developer by market value said it plans to invest 21.5 billion yuan (US$3.1 billon) in property this year after profit jumped 50 percent last year. Separately, Poly said it may raise up to 8 billion yuan from a private placement of shares. The stock dropped 3.28 percent to 17.7 yuan.
Bucking the downward trend, machinery makers gained with analysts believing construction demand will increase following the Lunar New Year period as companies start work on new projects
Guangxi Liugong Machinery Co, a Chinese maker of construction equipment, rose 1.82 percent to 15.08 yuan. Sany Heavy Industry Co, which makes concrete pumps and road rollers, climbed 1.36 percent to 23.11 yuan.
Changsha Zoomlion Heavy Industry Science & Technology Development Co, which makes heavy construction equipment, gained 5.98 percent to 19.14 yuan.
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