Key index seen to stay weak
By Ding Yining |
May 30, 2011, Monday
|
Print Edition
Print Edition
THE Shanghai stock market is expected to remain weak this week on low investor sentiment amid concerns that companies may post a lower profit growth and that inflation may worsen.
The Shanghai Composite Index sank 5.2 percent last week to close at 2,709.95 last Friday as it posted the biggest weekly drop in 11 months as investors worried about a lack of liquidity.
"The market may remain slack this week as China's second quarter economic growth is very likely to slow and inflation will remain relatively high in the near term," Galaxy Securities wrote in a note.
The official Purchasing Managers' Index will be released on Wednesday. The HSBC Flash China PMI stood at 51.1 in May, a 10-month low, the bank said last Monday.
Data for the monthly Consumer Price Index, a broad gauge of inflation, and industrial output are due to be unveiled on June 11. The brokerage also noted that frequent initial public offerings and additional refinancing plans by companies will continue to drain capital out of the market.
A total of 67 listed companies have floated additional new shares and raised a combined 187.1 billion yuan (US$30.3 billion) on the domestic stock market. Another 163 firms have applied for additional share offerings which aim to raise as much as 416.7 billion yuan.
The market may post a technical rebound over the next few weeks because blue chips and heavily-weighted shares are now at a very low price level, Shenyin Wanguo Securities wrote in a report.
The Shanghai Composite Index sank 5.2 percent last week to close at 2,709.95 last Friday as it posted the biggest weekly drop in 11 months as investors worried about a lack of liquidity.
"The market may remain slack this week as China's second quarter economic growth is very likely to slow and inflation will remain relatively high in the near term," Galaxy Securities wrote in a note.
The official Purchasing Managers' Index will be released on Wednesday. The HSBC Flash China PMI stood at 51.1 in May, a 10-month low, the bank said last Monday.
Data for the monthly Consumer Price Index, a broad gauge of inflation, and industrial output are due to be unveiled on June 11. The brokerage also noted that frequent initial public offerings and additional refinancing plans by companies will continue to drain capital out of the market.
A total of 67 listed companies have floated additional new shares and raised a combined 187.1 billion yuan (US$30.3 billion) on the domestic stock market. Another 163 firms have applied for additional share offerings which aim to raise as much as 416.7 billion yuan.
The market may post a technical rebound over the next few weeks because blue chips and heavily-weighted shares are now at a very low price level, Shenyin Wanguo Securities wrote in a report.
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