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December 26, 2011

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Index may struggle as no sharp rally seen

SHANGHAI'S stock index may struggle this week to touch the 2,300-point level in the last trading week of the year as observers rule out a sharp rebound after the market suffered seven consecutive weeks of losses.

They cited the general weak sentiment, a lack of positive news and most investors tending to stay away from the market as the year end nears for their not so rosy optimism.

The Shanghai Composite Index rose 0.9 percent on Friday to end at 2,204.78, the first rise in a week, trimming last week's loss to 0.9 percent. The index gained on Friday because of speculation the government may ease monetary policies and relax curbs on the property market to prevent the economy from slowing further.

Southwest Securities analyst Zhang Gang is more optimistic that the index will test 2,300 this week. He also said year-end window dressing, a common practice by fund managers and other institutions to boost portfolio, may help support the index.

But Minsheng Securities analyst Wu Chunhua said slower growth in earnings of state-owned enterprises and exports signaled the economy may get worse.

Observers cautioned about the railway sector. CSR Corp, China's biggest train maker, may face pressure today after Railway Minister Sheng Guangzu said on Friday rail building will be cut further next year on rising concerns over debts and safety issues.




 

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