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Developers and metal producers drag Shanghai index
By Lydia Chen |
May 30, 2011, Monday
|
Online Edition
Online Edition
SHARES in Shanghai dipped today, extending an eight-day losing streak, which some analysts said could be an opportunity to buy on the low while others warned a further fall would appear.
The Shanghai Composite Index seesawed between gaining and losing territories in the afternoon session. Gains made by lenders over signs of easing liquidity in the market were countered by losses among developers, gold and non-ferrous metal producers.
The index was down 0.13 percent to 2,706.36. Turnover shrank to 71.12 billion yuan (US$10.96 billion)
Kingray New Materials Science & Technology Co plunged 7.02 percent to 18.01 yuan. Industrial & Commercial Bank of China, the world's largest bank, rallied 3.87 percent to 4.56 yuan.
"The opportunity is coming," said Mao Yu, chairman of 51value.com, a finance analysis website. "There is no room left for the downward trend given that shares in the market now have price-to-earning level close to their record lows."
The weighted average P/E ratio of shares in the SSE 50 Index, a basket of 50 largest stocks of good liquidity selected from Shanghai market, now stands around 9.6 times, which is even lower than the 12 times they were when the key index plunged to 1,600 points, according to Mao.
Dai Xianglong, president of the National Council for Social Security Fund in charge of more than 740 billion yuan in capital, said earlier that six asset management firms have gained 10 billion yuan from the fund to invest in the mainland's stock markets.
"The last two times when he made similar decisions to put more money from the national fund into stocks both coincided with market bottom levels," Mao added.
Falling money market rates may be another sign for a pick-up in stock prices. The seven-day repo rate sliped 119.50 basis points, heading towards the 3.20 percent level in Shanghai by 11:30am today, compared with a three-month high of 5.43 percent last Wednesday.
"It's time to take a good look at big caps that have suffered big losses but enjoyed big profit rebounds in their earning reports," Mao suggested.
However, analysts with China International Capital Corp, cautioned the market may fall by another 5-10 percent to as low as 2,500 points because of China's continuing high inflation and tightening policies.
The leading Chinese investment bank suggested investors cut their exposure to stocks if there's any short-term rebound, the firm said in a note today.
The mid-June will be a window for authorities to raise both the interest rates and banks' reserve rate, it added.
China's inflation in June may jump 5.7 percent from a year earlier, said Li Xunlei, chief economist at Guotai Junan Securities Co, which will lead to an interest rates hike.
The Shanghai Composite Index seesawed between gaining and losing territories in the afternoon session. Gains made by lenders over signs of easing liquidity in the market were countered by losses among developers, gold and non-ferrous metal producers.
The index was down 0.13 percent to 2,706.36. Turnover shrank to 71.12 billion yuan (US$10.96 billion)
Kingray New Materials Science & Technology Co plunged 7.02 percent to 18.01 yuan. Industrial & Commercial Bank of China, the world's largest bank, rallied 3.87 percent to 4.56 yuan.
"The opportunity is coming," said Mao Yu, chairman of 51value.com, a finance analysis website. "There is no room left for the downward trend given that shares in the market now have price-to-earning level close to their record lows."
The weighted average P/E ratio of shares in the SSE 50 Index, a basket of 50 largest stocks of good liquidity selected from Shanghai market, now stands around 9.6 times, which is even lower than the 12 times they were when the key index plunged to 1,600 points, according to Mao.
Dai Xianglong, president of the National Council for Social Security Fund in charge of more than 740 billion yuan in capital, said earlier that six asset management firms have gained 10 billion yuan from the fund to invest in the mainland's stock markets.
"The last two times when he made similar decisions to put more money from the national fund into stocks both coincided with market bottom levels," Mao added.
Falling money market rates may be another sign for a pick-up in stock prices. The seven-day repo rate sliped 119.50 basis points, heading towards the 3.20 percent level in Shanghai by 11:30am today, compared with a three-month high of 5.43 percent last Wednesday.
"It's time to take a good look at big caps that have suffered big losses but enjoyed big profit rebounds in their earning reports," Mao suggested.
However, analysts with China International Capital Corp, cautioned the market may fall by another 5-10 percent to as low as 2,500 points because of China's continuing high inflation and tightening policies.
The leading Chinese investment bank suggested investors cut their exposure to stocks if there's any short-term rebound, the firm said in a note today.
The mid-June will be a window for authorities to raise both the interest rates and banks' reserve rate, it added.
China's inflation in June may jump 5.7 percent from a year earlier, said Li Xunlei, chief economist at Guotai Junan Securities Co, which will lead to an interest rates hike.
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