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Gloomy trading reflects a year of depression
By Pan Xiaoyi |
January 1, 2009, Thursday
|
Print Edition
Print Edition
SHANGHAI'S key stock index ended the year with an eighth-straight daily loss, sending the shares to the worst yearly performance in its 18-year history.
The benchmark index tumbled 65.39 percent last year and wiped nearly US$3 trillion off the market value, making China the world's worst-performing major stock market for the year.
"The losing streak at the end of the year is exactly a reflection of this year's bearish market. Rebounds appeared occasionally but the index headed south finally," said Wang Xingjun, an analyst from Donghai Securities Co.
Shares slumped as corporate margins fell amid slowing demand and rising costs. Profits of 1,604 listed companies in both bourses on the Chinese mainland reported a slower growth for the third quarter. Profitability fell 9.03 percent in this quarter from a year ago, a drop of 19.11 percent compared with that of the second quarter.
Companies owned by local governments reportedly had a combined 12-percent decline in profit for the first 11 months because of natural disasters and the economic slowdown.
The benchmark index has lost 2.69 percent in December. It dropped 70.12 percent from its record high on October 16, 2007, when it closed at 6,092.06 points.
The Shanghai Composite Index lost 0.66 percent yesterday, or 12.11 points to 1,820.81 points, the lowest since November 7 when the index ended at 1,747.71 points.
China's economy expanded 9 percent in the third quarter, the slowest pace in five years. "The expiry of the locked-up period for a large number of non-tradable shares put a huge pressure on the market while the global financial crisis weighed it down even further," Wang Xingjun said.
A total of 62.6 billion yuan of non-tradable shares were floated this year, dragging the market down.
Analysts were divided on the prospects of the stock markets next year.
The government is expected to roll out more stimulus packages to bolster the economy and lift the stock market but the market has already been undervalued after the burst of the speculative bubble.
Weak market sentiment will restrict the rebound in the midst of worsening corporate performance and investors seem to be immune from the positive measures being announced, experts said.
The benchmark index tumbled 65.39 percent last year and wiped nearly US$3 trillion off the market value, making China the world's worst-performing major stock market for the year.
"The losing streak at the end of the year is exactly a reflection of this year's bearish market. Rebounds appeared occasionally but the index headed south finally," said Wang Xingjun, an analyst from Donghai Securities Co.
Shares slumped as corporate margins fell amid slowing demand and rising costs. Profits of 1,604 listed companies in both bourses on the Chinese mainland reported a slower growth for the third quarter. Profitability fell 9.03 percent in this quarter from a year ago, a drop of 19.11 percent compared with that of the second quarter.
Companies owned by local governments reportedly had a combined 12-percent decline in profit for the first 11 months because of natural disasters and the economic slowdown.
The benchmark index has lost 2.69 percent in December. It dropped 70.12 percent from its record high on October 16, 2007, when it closed at 6,092.06 points.
The Shanghai Composite Index lost 0.66 percent yesterday, or 12.11 points to 1,820.81 points, the lowest since November 7 when the index ended at 1,747.71 points.
China's economy expanded 9 percent in the third quarter, the slowest pace in five years. "The expiry of the locked-up period for a large number of non-tradable shares put a huge pressure on the market while the global financial crisis weighed it down even further," Wang Xingjun said.
A total of 62.6 billion yuan of non-tradable shares were floated this year, dragging the market down.
Analysts were divided on the prospects of the stock markets next year.
The government is expected to roll out more stimulus packages to bolster the economy and lift the stock market but the market has already been undervalued after the burst of the speculative bubble.
Weak market sentiment will restrict the rebound in the midst of worsening corporate performance and investors seem to be immune from the positive measures being announced, experts said.
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