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December 21, 2009

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Analysts forecast market correction

THE Chinese mainland's stock market is likely to have more corrections this week amid the government's stance to curb asset price bubbles, according to analysts.

The Shanghai Composite Index posted a weekly loss of 4.11 percent to end at a three-week low of 3,113.89 last week after more share supplies weighed on the stock prices.

"New share sales are picking up momentum since the resumption of initial public offerings in June," said Gui Haoming, a Shenyin & Wanguo Securities Co analyst.

"It seems the regulator has no intention of slowing down the pace of share supplies in an attempt to control asset bubbles in the stock market," added Gui.

Eleven stocks will sell shares this week, including China CNR Corp, one of the country's two leading train manufacturers, which plans to raise up to 13.9 billion yuan (US$2.04 billion) in a Shanghai IPO.

The government also began to rein in the asset price bubble in the property market.

China has raised the down payment requirement for land purchases to at least 50 percent of the total price from the original 20 percent to 30 percent.

"It is a beginning of the government's effort to rein in the overheated real estate market. There are market concerns more strict measures will be introduced afterward," said Wang Fan, a Donghai Securities Co analyst. "Property developers may be another batch of potential fundraisers after lenders and stay sluggish for a long time."


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