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Shares edge up after government boost
October 11, 2011, Tuesday
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Online Edition
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SHANGHAI shares edged up today after a central government-owned investment company pledged to spend 197 million yuan (US$31.02 million) on buying shares in China's "Big Four" banks.
But the Shanghai Composite Index's small gains today still disappointed many investors and analysts cautioned that the move wasn't enough to turn the pessimistic sentiment around.
The Shanghai benchmark index managed to hold on to a 0.16 percent rise at the last minutes of today's trading despite a more than 2 percent jump at the opening. Turnover climbed to 62.8 billion yuan from yesterday's merely 40 million yuan.
"The shrink in the gains indicates that pessimism is still dominating the market," said Wang Liemin, an analyst with Guosen Securities. "Investors worry about China's slowing economic growth that is not likely to disappear overnight simply because of Huijin's share purchase," he added.
Financials rose strongly, led by banks after Central Huijin Investment Ltd said after market close yesterday that it had begun stockpiling shares in the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China. The move is seen as a bid to save the stock market that has slumped more than 17 percent so far this year.
ICBC, the country's biggest lender, added 1.50 percent to 4.05 yuan. The Agriculture Bank gained 2.02 percent while Bank of China rose 2.09 percent and Construction Bank jumped 2.49 percent.
"The amount of shares Huijin bought yesterday is far from enough to reverse the sliding trend in the market," Wang said. "It is more like a symbolic move that indicates the central government's judgment that the market is now at bottom levels," according to Wang.
Central Huijin will continue with "related market operations," the unit of China's sovereign wealth fund said, without providing details on how much and how long it would invest and whether it would focus on buying shares in Hong Kong or Shanghai.
Chen Li, China A-share strategist at UBS Securities, also said that Huijin's move was not enough to halt possible further market slides.
"The A-share market will suffer another blow that may drag the benchmark index to a new record low," Chen said.
But the Shanghai Composite Index's small gains today still disappointed many investors and analysts cautioned that the move wasn't enough to turn the pessimistic sentiment around.
The Shanghai benchmark index managed to hold on to a 0.16 percent rise at the last minutes of today's trading despite a more than 2 percent jump at the opening. Turnover climbed to 62.8 billion yuan from yesterday's merely 40 million yuan.
"The shrink in the gains indicates that pessimism is still dominating the market," said Wang Liemin, an analyst with Guosen Securities. "Investors worry about China's slowing economic growth that is not likely to disappear overnight simply because of Huijin's share purchase," he added.
Financials rose strongly, led by banks after Central Huijin Investment Ltd said after market close yesterday that it had begun stockpiling shares in the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China. The move is seen as a bid to save the stock market that has slumped more than 17 percent so far this year.
ICBC, the country's biggest lender, added 1.50 percent to 4.05 yuan. The Agriculture Bank gained 2.02 percent while Bank of China rose 2.09 percent and Construction Bank jumped 2.49 percent.
"The amount of shares Huijin bought yesterday is far from enough to reverse the sliding trend in the market," Wang said. "It is more like a symbolic move that indicates the central government's judgment that the market is now at bottom levels," according to Wang.
Central Huijin will continue with "related market operations," the unit of China's sovereign wealth fund said, without providing details on how much and how long it would invest and whether it would focus on buying shares in Hong Kong or Shanghai.
Chen Li, China A-share strategist at UBS Securities, also said that Huijin's move was not enough to halt possible further market slides.
"The A-share market will suffer another blow that may drag the benchmark index to a new record low," Chen said.
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