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Shanghai equities rise on stronger air carriers
By Lydia Chen |
August 11, 2011, Thursday
|
Online Edition
Online Edition
SHARES in Shanghai posted an unexpected rise today, outperforming most overseas markets suffering turmoil amid investors intensified concerns over debt problems in Europe.
The Shanghai Composite Index, although opened 1.58 percent lower at 9:30am, managed to recover the losses and jump 1.27 percent higher to close at 2,581.51. Turnover stood at 100 billion yuan, compared with yesterday's 104 billion yuan.
Analysts credited today's market outperformance to historically low share valuations in the market right now. The Shanghai benchmark has already lost more than 8.6 percent so far this year. Average price to earning ratio of shares in Shanghai dropped to 14 times.
"Shares are already very cheap," said Zeng Tao, an analyst with Galaxy Securities Co. "They are now at a level almost as low as they were when the market plunged to historic low in 2008."
But investors' confidence may still require some time to recover, meaning stocks are likely to fluctuate in a short term, Zeng added.
Major brokerages including Guotai Jun'an Securities, Shenyin Wanguo Securities and Oriental Securities both forecast that 2,400 points would be the bottom level.
Airliners today outperformed the broader market, rising on a record high of yuan after the Federal Reserve pledged to keep interest rates at a record low while analysts expected China will use currency gains to help rein in inflation.
China Eastern Airlines Co hiked the daily cap of 10 percent to 5.57 yuan.
The yuan strengthened beyond 6.4 per dollar for the first time in 17 years today. It touched 6.3938, the strongest level since the country unified official and market exchange rates at the end of 1993.
Rallied financials were also the biggest supporters to stabilize the market.
Industrial Bank paced the gains among its industry peers with a rise of 2.54 percent to 12.92 yuan. China Construction Bank Corp edged up 0.67 percent to 4.54 yuan on hopes that a potential stake sale by Bank of America Corp could remove an overhang that has worried investors amid US debt crisis.
The unexpected performance in the local market was also said to be thankful to a market-saving move by National Council for Social Security Fund, the biggest investor who manages total asset worth more than 856 billion yuan by the end of last year, according to the website of The Economic Observer.
The website cited unnamed sources close to the managers of the fund that the giant investor has already been ready for a bottom fishing with pumping up to 10 billion yuan on all its stock accounts.
But still, Zeng cautioned investors to maintain their stock exposure at a relatively low level of 20 to 50 percent since a rebound momentum is not likely in a short term.
"If a stock share price sees 5 to 7 percent tumble, then it might be an ideal investment candidate," he added.
The Shanghai Composite Index, although opened 1.58 percent lower at 9:30am, managed to recover the losses and jump 1.27 percent higher to close at 2,581.51. Turnover stood at 100 billion yuan, compared with yesterday's 104 billion yuan.
Analysts credited today's market outperformance to historically low share valuations in the market right now. The Shanghai benchmark has already lost more than 8.6 percent so far this year. Average price to earning ratio of shares in Shanghai dropped to 14 times.
"Shares are already very cheap," said Zeng Tao, an analyst with Galaxy Securities Co. "They are now at a level almost as low as they were when the market plunged to historic low in 2008."
But investors' confidence may still require some time to recover, meaning stocks are likely to fluctuate in a short term, Zeng added.
Major brokerages including Guotai Jun'an Securities, Shenyin Wanguo Securities and Oriental Securities both forecast that 2,400 points would be the bottom level.
Airliners today outperformed the broader market, rising on a record high of yuan after the Federal Reserve pledged to keep interest rates at a record low while analysts expected China will use currency gains to help rein in inflation.
China Eastern Airlines Co hiked the daily cap of 10 percent to 5.57 yuan.
The yuan strengthened beyond 6.4 per dollar for the first time in 17 years today. It touched 6.3938, the strongest level since the country unified official and market exchange rates at the end of 1993.
Rallied financials were also the biggest supporters to stabilize the market.
Industrial Bank paced the gains among its industry peers with a rise of 2.54 percent to 12.92 yuan. China Construction Bank Corp edged up 0.67 percent to 4.54 yuan on hopes that a potential stake sale by Bank of America Corp could remove an overhang that has worried investors amid US debt crisis.
The unexpected performance in the local market was also said to be thankful to a market-saving move by National Council for Social Security Fund, the biggest investor who manages total asset worth more than 856 billion yuan by the end of last year, according to the website of The Economic Observer.
The website cited unnamed sources close to the managers of the fund that the giant investor has already been ready for a bottom fishing with pumping up to 10 billion yuan on all its stock accounts.
But still, Zeng cautioned investors to maintain their stock exposure at a relatively low level of 20 to 50 percent since a rebound momentum is not likely in a short term.
"If a stock share price sees 5 to 7 percent tumble, then it might be an ideal investment candidate," he added.
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