Investors eye purchase of 'under-valued' shares
By Pan Xiaoyi |
May 24, 2010, Monday
|
Print Edition
Print Edition
THE Shanghai stock market is likely to edge up this week as investors may start to buy after previous share declines and on speculation that tighter policies may possibly be eased, analysts said.
The benchmark Shanghai Composite Index lost 4.2 percent last week, extending a 21 percent decline so far this year, on concerns over inflation, more stringent efforts to clamp down on speculation in the property market and Europe's debt crisis.
"The valuation of listed companies is becoming more rational and some institutional investors began to buy shares and increased their holdings," said Chen Huiqin, an analyst at Huatai Securities Co.
Among the 655 listed companies that have released mid-term estimates, 63 percent of them - 413 - forecast a rise in earnings or a return to black ink. The average price earnings ratio has come back to a reasonable level and may even be under-valued in some cases, according to market watchers.
"The credit crisis in Europe raised concerns over a slowing domestic economy as the European Union is China's biggest trade partner," said Yi Xiaobin, an analyst from Galaxy Securities Co. "It also led to speculation that authorities will be more cautious in rolling out tighter measures" to cool the economy.
The benchmark Shanghai Composite Index lost 4.2 percent last week, extending a 21 percent decline so far this year, on concerns over inflation, more stringent efforts to clamp down on speculation in the property market and Europe's debt crisis.
"The valuation of listed companies is becoming more rational and some institutional investors began to buy shares and increased their holdings," said Chen Huiqin, an analyst at Huatai Securities Co.
Among the 655 listed companies that have released mid-term estimates, 63 percent of them - 413 - forecast a rise in earnings or a return to black ink. The average price earnings ratio has come back to a reasonable level and may even be under-valued in some cases, according to market watchers.
"The credit crisis in Europe raised concerns over a slowing domestic economy as the European Union is China's biggest trade partner," said Yi Xiaobin, an analyst from Galaxy Securities Co. "It also led to speculation that authorities will be more cautious in rolling out tighter measures" to cool the economy.
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