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Index not seen to tumble but caution urged

The benchmark Shanghai Composite Index may hover around last week's closing level of above 2,400 points in the short term but analysts said the barometer is not likely to decline sharply in the middle or long term.

"Heavyweight stocks and growth enterprise-related shares were strong generally last week which boosted the stock market," Yang Ming, an analyst of Shanghai Securities, wrote in a research report. But he cautioned the index may go through some adjustments and "may fluctuate within the range of 2,350 to 2,500 points."

The China Securities Regulatory Commission last Tuesday issued new rules, effective next month, to prepare for the launch of the long-awaited Nasdaq-style second board, Growth Enterprise Market. The GEM aims to offer an avenue for small and medium startup firms to access funds.

"The index may range between 2,300 and 2,440 points in the next two or three weeks and investors should be cautious," said Qian Qimin, an analyst with Shenyin and Wanguo Securities.


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