Shanghai market seen weak
By Feng Jianmin |
March 21, 2011, Monday
|
Print Edition
Print Edition
THE Shanghai stock market is expected to perform weakly this week as concerns over Japan's recovery process from the natural disasters and nuclear radiation continue while an expected tight liquidity in the domestic market will hurt sentiment.
The Shanghai Composite Index made a weekly loss of 1 percent last week while Japan's Nikkei 225 tumbled more than 10 percent.
The People's Bank of China last week reported that M2, the broadest measure of money supply, fell nearly 10 percent in February from a year earlier, while new loans in February were 192.9 billion yuan less than last year.
The central bank last Friday said it would raise the bank reserve requirement ratio by 0.5 percentage point to freeze liquidity from the financial system. A total of 360 billion yuan (US$54.8 billion) of capital may be frozen from lending from Friday, when the increase takes effect.
But investors were still worried about Japan's economic recovery from the disasters despite the Bank of Japan having injected a total of 34 trillion yen (US$420 billion) into the market to buy assets and equities last week.
The Shanghai's stock index may slightly increase after the panic over the damage and radiation caused by the earthquake eases, said Zeng Xianzhao, an analyst at Everbright Securities. He is less worried about the hike in the reserve ratio but he said that caution among investors and tighter liquidity will still weigh on market sentiment.
"The market in March may be weaker because there's going to be less money around," Zeng said.
The Shanghai Composite Index made a weekly loss of 1 percent last week while Japan's Nikkei 225 tumbled more than 10 percent.
The People's Bank of China last week reported that M2, the broadest measure of money supply, fell nearly 10 percent in February from a year earlier, while new loans in February were 192.9 billion yuan less than last year.
The central bank last Friday said it would raise the bank reserve requirement ratio by 0.5 percentage point to freeze liquidity from the financial system. A total of 360 billion yuan (US$54.8 billion) of capital may be frozen from lending from Friday, when the increase takes effect.
But investors were still worried about Japan's economic recovery from the disasters despite the Bank of Japan having injected a total of 34 trillion yen (US$420 billion) into the market to buy assets and equities last week.
The Shanghai's stock index may slightly increase after the panic over the damage and radiation caused by the earthquake eases, said Zeng Xianzhao, an analyst at Everbright Securities. He is less worried about the hike in the reserve ratio but he said that caution among investors and tighter liquidity will still weigh on market sentiment.
"The market in March may be weaker because there's going to be less money around," Zeng said.
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