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November 16, 2009

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Resistance seen at 3,200 points

THE Shanghai stock market is likely to edge up this week supported by a more solid economic recovery but analysts have cautioned that the key index is expected to meet technical resistance at the 3,200 point level.

The benchmark Shanghai Composite Index posted a weekly rise of 0.7 percent to end at 3,187.65 last week.

Consumer-related shares performed very strongly last week as the Chinese government continued to encourage domestic consumption to shore up economic recovery.

Macroeconomic data released last week showed exports declined at the slowest pace this year at 13.8 percent in October, while China's industrial output rose 16.1 percent year on year.

"Exports are improving gradually along with stronger industrial output and a decline in the consumer product index eased last month, indicating a sound and stable economic recovery," said Li Daxiao, an analyst at Yingda Securities Co.

Retail sales remained strong, growing 16.2 percent in October from a year ago, and bolstered the consumption sectors including home appliance firms and beverage makers.

But some analysts warned a correction is in the pipeline as the gauge has failed in several bids to surpass 3,200 points amid investors taking profit after shares kept rising last week.

"But the fluctuations will not change the A share market's upward momentum," said Yan Ji, an analyst at HSBC Jintrust Fund Management Co.


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