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Shanghai index recovers on stronger global markets
By Lydia Chen |
August 10, 2011, Wednesday
|
Online Edition
Online Edition
SHARES in Shanghai rebounded for the first time in four days on strength of a cross-board rally as analysts said the reeling from debt crisis in the United States and Europe may be too much.
However, some analysts sound their concerns and considered today's rebound was nowhere near a momentum that could change the direction of a volatile market.
Rebounds in overseas markets were also a factor behind the local rally. The US Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.
Bleak economy prospects in the US and Europe may press China to hold off on further monetary tightening, according to economists.
Meanwhile, at a meeting yesterday, Premier Wen Jiabao toned down his inflation rhetoric while urging global action to calm markets, which boosted investors' confidence in Shanghai.
The Shanghai Composite Index climbed 0.91 percent to 2,549.18. Turnover dipped to 104 billion yuan (US$16.22 billion) from yesterday's 107.7 billion yuan.
Real estate firms were among the strongest counters today with a 1.96 percent rise for the sector. Nearly 6.5 billion new funds flooded into the sector today, the most among all.
Six listed real estate firms, including Hainan Zhenghe Industrial Group Co, Shanghai New Huangpu Real Estate Co, hiked the daily cap of 10 percent. China Vanke jumped 1.69 percent to 8.44 yuan. Poly Real Estate Co added 1.48 percent to 11 yuan.
Average price to earning ratio of developers slumped to around 10 times right now, which was even lower when the Shanghai benchmark index sank to 1,664 points in 2008 amid a global financial turmoil.
Average PE levels of 50 biggest heavyweight plays in the A-share markets now stood at about 14 times while their earning growth posted an average of 20 percent, Yuan Jianxin, an analyst with Changjiang Securities, said.
Despite the cheap price, Yuan considered today's rebound was only "short-covering" because the mainland markets are now like a "startled bird" vulnerable to economic uncertainties both at home and abroad.
Ye Tan, an independent finance commentator, agreed.
"Inside trading, a large slew of new listings and repeated issuing of additional shares are the core reason that has made the markets slump," Ye said in her latest column on Financial Times' Chinese website today.
"The impacts caused by tumbles in overseas markets are just an excuse for speculators," she added.
But Goldman Sachs Asset Management Chairman Jim O'Neill said in a Sunday newsletter that a fresh bull market move is likely to start when Chinese inflation has clearly peaked and their policy makers can move away from tightening policy.
However, some analysts sound their concerns and considered today's rebound was nowhere near a momentum that could change the direction of a volatile market.
Rebounds in overseas markets were also a factor behind the local rally. The US Federal Reserve made an unprecedented pledge to keep interest rates near zero for at least two years, stemming a global equity rout for the time being.
Bleak economy prospects in the US and Europe may press China to hold off on further monetary tightening, according to economists.
Meanwhile, at a meeting yesterday, Premier Wen Jiabao toned down his inflation rhetoric while urging global action to calm markets, which boosted investors' confidence in Shanghai.
The Shanghai Composite Index climbed 0.91 percent to 2,549.18. Turnover dipped to 104 billion yuan (US$16.22 billion) from yesterday's 107.7 billion yuan.
Real estate firms were among the strongest counters today with a 1.96 percent rise for the sector. Nearly 6.5 billion new funds flooded into the sector today, the most among all.
Six listed real estate firms, including Hainan Zhenghe Industrial Group Co, Shanghai New Huangpu Real Estate Co, hiked the daily cap of 10 percent. China Vanke jumped 1.69 percent to 8.44 yuan. Poly Real Estate Co added 1.48 percent to 11 yuan.
Average price to earning ratio of developers slumped to around 10 times right now, which was even lower when the Shanghai benchmark index sank to 1,664 points in 2008 amid a global financial turmoil.
Average PE levels of 50 biggest heavyweight plays in the A-share markets now stood at about 14 times while their earning growth posted an average of 20 percent, Yuan Jianxin, an analyst with Changjiang Securities, said.
Despite the cheap price, Yuan considered today's rebound was only "short-covering" because the mainland markets are now like a "startled bird" vulnerable to economic uncertainties both at home and abroad.
Ye Tan, an independent finance commentator, agreed.
"Inside trading, a large slew of new listings and repeated issuing of additional shares are the core reason that has made the markets slump," Ye said in her latest column on Financial Times' Chinese website today.
"The impacts caused by tumbles in overseas markets are just an excuse for speculators," she added.
But Goldman Sachs Asset Management Chairman Jim O'Neill said in a Sunday newsletter that a fresh bull market move is likely to start when Chinese inflation has clearly peaked and their policy makers can move away from tightening policy.
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