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December 14, 2009

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Market seen to stay sluggish

THE Shanghai stock market is likely to remain sluggish this week amid a lukewarm investor sentiment and a possible share glut, analysts said.

The benchmark Shanghai Composite Index posted a weekly loss of 2.1 percent to end at 3,247.32 last Friday despite positive macroeconomic figures for November which pointed to a firmer economic recovery in China and a central government's decision to extend stimulus measures for the auto industry and for home appliance purchases to boost domestic consumption and sustain economic growth.

"The turnover shrank last week even with the favorable financial data and industry supporting packages, indicating investors took a wait-and-see attitude," China Merchants Securities Co wrote in note. "A stable rebound of the key index depends on rising transaction volume and stronger heavyweights to lead the gauge back on the upward trend."

Analysts are also worried that liquidity concerns are weighing on the market as China North Locomotive and Rolling Stock is likely to raise 16.5 billion yuan (US$2.42 billion) in the Shanghai market. A second group of eight start-ups plans to list on ChiNext, a Nasdaq-style board, soon.


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