No consensus on stock market rebound
By Wang Weini |
August 14, 2010, Saturday
|
Print Edition
Print Edition
ANALYSTS are divided on whether the Shanghai stock market will continue rebounding amid stronger inflation expectations and slower economic growth.
"The recent rebound in China's stocks may be coming to an end, as rising prices of agricultural products and daily necessities strengthen inflation expectations and hopes for looser macro-economy policies recede," Wang Cheng, an analyst at Guotai Junan Securities Co, said in a report yesterday.
China's Consumer Price Index gained 3.3 percent last month, the fastest pace in 21 months, driven by rising food costs as floods destroyed crops, according to the National Bureau of Statistics.
The benchmark Shanghai Composite Index jumped nearly 10 percent in July to become the best performer in the Asia-Pacific region.
"Further correction can be expected," Wang said.
The Shanghai Composite Index has slipped about 20 percent so far this year after the central government boosted measures to curb inflation and property speculation.
In July, growth in industrial production and other key economic indices continued to slow, triggering concerns that the government may fine-tune policies to support growth.
"We maintain our call that the policy debate period has begun. We believe that the policy makers will not be able to conclude the policy debate based on the July economic data. It seems the economic slowdown is not severe enough to prompt a policy reversal," China International Capital Co said in a note.
However, Industrial Securities expected a drastic rebound in the third quarter of this year after negative news, such as July's CPI and China Everbright Bank's IPO, have been factored in.
"Floods impacted food prices in the short term, so inflation in July was likely to be the highest of this year and will likely recede in August," the securities house said.
"The recent rebound in China's stocks may be coming to an end, as rising prices of agricultural products and daily necessities strengthen inflation expectations and hopes for looser macro-economy policies recede," Wang Cheng, an analyst at Guotai Junan Securities Co, said in a report yesterday.
China's Consumer Price Index gained 3.3 percent last month, the fastest pace in 21 months, driven by rising food costs as floods destroyed crops, according to the National Bureau of Statistics.
The benchmark Shanghai Composite Index jumped nearly 10 percent in July to become the best performer in the Asia-Pacific region.
"Further correction can be expected," Wang said.
The Shanghai Composite Index has slipped about 20 percent so far this year after the central government boosted measures to curb inflation and property speculation.
In July, growth in industrial production and other key economic indices continued to slow, triggering concerns that the government may fine-tune policies to support growth.
"We maintain our call that the policy debate period has begun. We believe that the policy makers will not be able to conclude the policy debate based on the July economic data. It seems the economic slowdown is not severe enough to prompt a policy reversal," China International Capital Co said in a note.
However, Industrial Securities expected a drastic rebound in the third quarter of this year after negative news, such as July's CPI and China Everbright Bank's IPO, have been factored in.
"Floods impacted food prices in the short term, so inflation in July was likely to be the highest of this year and will likely recede in August," the securities house said.
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