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Optimism for rebound boosts Shanghai market
By Ye Zhen |
September 28, 2012, Friday
|
Online Edition
Online Edition
SHANGHAI stocks gained in the last trading day this month on speculation the market may rebound soon because the Shanghai Stock Exchange said China's stock market valuation is at a record low.
The key Shanghai Composite Index rose 1.45 percent to 2,086.17 points, adding to a weekly gain of 2.96 percent. Turnover was 64.8 billion yuan (US$10.3 billion) at the trading close. The index snapped a four-month losing trend by increasing 1.91 percent this month.
Market valuation of blue chips in domestic markets has sunken to its lowest level in history and shareholders are likely to have higher returns than investing in bonds, the Financial Innovation Laboratory with the Shanghai Stock Exchange said in a report.
The Shanghai Composite Index is valued 10.3 times estimated earnings, compared with 14.19 times for the S&P 500 that tracks US stocks, 12.6 times for FTSE 100, the London Stock Exchange index, and 35.68 times for Japan' s Nikkei index, according the report.
"History shows that a low market valuation tends to be followed by a substantial rebound," said Dr Liu Ti, director of the laboratory.
Hua Sheng, president of Yanjing Overseas Chinese University, said "an expected pickup in the nation's real economy in the fourth quarter will also give a boost to the stock market, especially when it has reached an all-time low."
Non-ferrous metals producers led the gains. Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech Co, China's biggest producer of rare earth materials, increased 3.2 percent to 34 yuan. Xiamen Tungsten Co rose 3.1 percent to 40.39 yuan.
Gold miners rallied after gold future for December delivery rose 1.5 percent to a seven-month high. Zijin Mining Group Co, the nation's largest gold producer, increased 3.9 percent to 4.01 yuan. Shandong Gold Mining Co climbed 3.8 percent to 41.72 yuan. Zhongjin Gold Corp jumped 5.1 percent to 18.19 yuan.
The key Shanghai Composite Index rose 1.45 percent to 2,086.17 points, adding to a weekly gain of 2.96 percent. Turnover was 64.8 billion yuan (US$10.3 billion) at the trading close. The index snapped a four-month losing trend by increasing 1.91 percent this month.
Market valuation of blue chips in domestic markets has sunken to its lowest level in history and shareholders are likely to have higher returns than investing in bonds, the Financial Innovation Laboratory with the Shanghai Stock Exchange said in a report.
The Shanghai Composite Index is valued 10.3 times estimated earnings, compared with 14.19 times for the S&P 500 that tracks US stocks, 12.6 times for FTSE 100, the London Stock Exchange index, and 35.68 times for Japan' s Nikkei index, according the report.
"History shows that a low market valuation tends to be followed by a substantial rebound," said Dr Liu Ti, director of the laboratory.
Hua Sheng, president of Yanjing Overseas Chinese University, said "an expected pickup in the nation's real economy in the fourth quarter will also give a boost to the stock market, especially when it has reached an all-time low."
Non-ferrous metals producers led the gains. Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech Co, China's biggest producer of rare earth materials, increased 3.2 percent to 34 yuan. Xiamen Tungsten Co rose 3.1 percent to 40.39 yuan.
Gold miners rallied after gold future for December delivery rose 1.5 percent to a seven-month high. Zijin Mining Group Co, the nation's largest gold producer, increased 3.9 percent to 4.01 yuan. Shandong Gold Mining Co climbed 3.8 percent to 41.72 yuan. Zhongjin Gold Corp jumped 5.1 percent to 18.19 yuan.
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