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Shanghai index posts biggest weekly loss in 11 months
By Lydia Chen |
May 27, 2011, Friday
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Online Edition
Online Edition
SHANGHAI shares extended losses for a seventh day today, with its key index posting the biggest weekly fall in 11 months due to shortage of liquidity while investors' concerns over the country's slower growth and worsening inflation intensified.
The Shanghai Composite Index lost 0.97 percent to 2,709.95. The index lost 5.5 percent this week. Turnover remained thin at 91.90 billion yuan (US$14.16 billion), indicating investors' reluctance to bet their money in the stock market.
"The continuous fall is mainly because liquidity in the market is getting tighter and tighter," said Liu Jun, deputy index investment officer, Huatai-Pinebridge Fund Management Co Ltd.
"Pessimism is widely spread in the market right now," Liu said. "The repeated tumbles might indicate that investors' concerns over companies' slower profits growth may be a little bit too much."
"The market is not likely to fall further. A rebound is possible if the tight liquidity situation is improved, which could also win back investors' confidence," Liu added.
Electricity producers were one of the biggest drags today. Sichuan Xichang Electric Power Co plunged 9.56 percent to 11.88 yuan.
Bloomberg News cited Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, as saying that China may have a power capacity shortage of 40 gigawatts this month and up to 60 gigawatts this summer.
The capacity shortfall will cut industrial output by 0.5 to 0.75 percentage point this year, Kowalczyk said in the report.
Meanwhile, China's industrial companies' profit growth started to slow after the country's repeated interest rates raises and curbs on lending to rein in inflation.
Industrial companies' profit climbed a year-on-year of 29.7 percent in the first four month to 1.49 trillion yuan, according to the National Bureau of Statistics. That compared with a 32 percent gain in the first quarter of this year.
However, on the positive side, a declining money-market rate may be a relief to investors.
The seven-day repurchase rate retreated from its highest level in three months today in Shanghai as up to 600 billion yuan central bank bills will come due in June, said Zuo Jianming, an analyst with Oriental Securities Co.
He also regarded a stake raise by the parent of the market heavyweight PetroChina was an indication that securities supervisors do not want to see more market slides.
In an apparent move to spur up prices, the state-owned China National Petroleum Corp bought 31.1 million yuan-denominated shares, equivalent to a 0.017 percent stake of PetroChina, to increase its share holding in the firm to 86.3 percent.
PetroChina jumped 0.83 percent to 10.97 yuan. Shares in the company have fallen more than 7 percent in the past month.
PetroChina Co Ltd said late yesterday that its parent China National Petroleum Corp has raised its stake in the firm by about 0.2 percent and has stated its intention to increase it further by up to 2 percent.
The Shanghai Composite Index lost 0.97 percent to 2,709.95. The index lost 5.5 percent this week. Turnover remained thin at 91.90 billion yuan (US$14.16 billion), indicating investors' reluctance to bet their money in the stock market.
"The continuous fall is mainly because liquidity in the market is getting tighter and tighter," said Liu Jun, deputy index investment officer, Huatai-Pinebridge Fund Management Co Ltd.
"Pessimism is widely spread in the market right now," Liu said. "The repeated tumbles might indicate that investors' concerns over companies' slower profits growth may be a little bit too much."
"The market is not likely to fall further. A rebound is possible if the tight liquidity situation is improved, which could also win back investors' confidence," Liu added.
Electricity producers were one of the biggest drags today. Sichuan Xichang Electric Power Co plunged 9.56 percent to 11.88 yuan.
Bloomberg News cited Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, as saying that China may have a power capacity shortage of 40 gigawatts this month and up to 60 gigawatts this summer.
The capacity shortfall will cut industrial output by 0.5 to 0.75 percentage point this year, Kowalczyk said in the report.
Meanwhile, China's industrial companies' profit growth started to slow after the country's repeated interest rates raises and curbs on lending to rein in inflation.
Industrial companies' profit climbed a year-on-year of 29.7 percent in the first four month to 1.49 trillion yuan, according to the National Bureau of Statistics. That compared with a 32 percent gain in the first quarter of this year.
However, on the positive side, a declining money-market rate may be a relief to investors.
The seven-day repurchase rate retreated from its highest level in three months today in Shanghai as up to 600 billion yuan central bank bills will come due in June, said Zuo Jianming, an analyst with Oriental Securities Co.
He also regarded a stake raise by the parent of the market heavyweight PetroChina was an indication that securities supervisors do not want to see more market slides.
In an apparent move to spur up prices, the state-owned China National Petroleum Corp bought 31.1 million yuan-denominated shares, equivalent to a 0.017 percent stake of PetroChina, to increase its share holding in the firm to 86.3 percent.
PetroChina jumped 0.83 percent to 10.97 yuan. Shares in the company have fallen more than 7 percent in the past month.
PetroChina Co Ltd said late yesterday that its parent China National Petroleum Corp has raised its stake in the firm by about 0.2 percent and has stated its intention to increase it further by up to 2 percent.
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