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Silver lining in the gloomy stock market outlook
By Lydia Chen |
October 10, 2011, Monday
|
Online Edition
Online Edition
SHANGHAI shares retreated to a more than two year low today 鈥 the first trading day after a week-long holiday 鈥 as analysts cautioned the market face further slides.
But this now remains to be seen after Central Huijin Investment Ltd, an investment company owned by the Chinese government, said after market close that it would start stockpiling shares of the country's biggest four banks. This move is said to be part of a strategy to save the stock market that has slumped over 17 percent so far this year.
The Shanghai Composite Index today lost 0.61 percent to 2,344.79, the lowest since March 25, 2009, when the benchmark index closed at 2,291.55. Turnover was merely 40 billion yuan (US$6.29 billion) for the whole day, the lowest since the end of 2008 when the country was struggling with the global financial crisis.
"The 2,319 point will be a technical support and could have substantial psychological impacts on investors," said Zhou Xuesong, an analyst with CITIC Securities. "If the index breaks the support, the market will see more panic selling," he added.
Developers were one of the biggest drag factors today after Chinese central bank adviser Zhou Qiren said the country should keep a prudent monetary policy because small companies would have a better development environment only if inflation was thoroughly curbed, the Beijing Morning Post reported today.
China Vanke Co, the nation's largest developer, dropped 3.31 percent to 7 yuan. Poly Real Estate Group Co, the second- biggest, fell 3.46 percent to 8.93 yuan.
Sales of new homes, excluding affordable housing, dropped 40 percent from a week earlier to 85,400 square meters in Shanghai during the golden week, traditionally a peak sales season, Shanghai Deovolente Realty Co said.
But house prices barely budged. Home prices dipped an average of 0.03 percent in September from August to 8,877 yuan per square meter across the country, according to China Index Academy.
China International Investment Corp warned today that the prospects of the stock markets were gloomy as selling more shares would continue to be a major direct financing tool for Chinese firms.
"The supply of new initial public offering will remain more than sufficient for a long time," the leading Chinese investment bank said.
However, with the move by Huijin to stockpile bank shares, investors may need to rethink whether it's wise to abstain from buying shares.
Huijin announced late this afternoon that it has bought shares of the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China starting today.
The government-backed firm has a stellar investment record. On September 19, 2008, it announced a similar plan to buy shares of major banks, a move that boosted the Shanghai index to 2,300 points from 1,900 points within a month.
However, at the end of October that year, the index fell again to 1,664 points.
But this now remains to be seen after Central Huijin Investment Ltd, an investment company owned by the Chinese government, said after market close that it would start stockpiling shares of the country's biggest four banks. This move is said to be part of a strategy to save the stock market that has slumped over 17 percent so far this year.
The Shanghai Composite Index today lost 0.61 percent to 2,344.79, the lowest since March 25, 2009, when the benchmark index closed at 2,291.55. Turnover was merely 40 billion yuan (US$6.29 billion) for the whole day, the lowest since the end of 2008 when the country was struggling with the global financial crisis.
"The 2,319 point will be a technical support and could have substantial psychological impacts on investors," said Zhou Xuesong, an analyst with CITIC Securities. "If the index breaks the support, the market will see more panic selling," he added.
Developers were one of the biggest drag factors today after Chinese central bank adviser Zhou Qiren said the country should keep a prudent monetary policy because small companies would have a better development environment only if inflation was thoroughly curbed, the Beijing Morning Post reported today.
China Vanke Co, the nation's largest developer, dropped 3.31 percent to 7 yuan. Poly Real Estate Group Co, the second- biggest, fell 3.46 percent to 8.93 yuan.
Sales of new homes, excluding affordable housing, dropped 40 percent from a week earlier to 85,400 square meters in Shanghai during the golden week, traditionally a peak sales season, Shanghai Deovolente Realty Co said.
But house prices barely budged. Home prices dipped an average of 0.03 percent in September from August to 8,877 yuan per square meter across the country, according to China Index Academy.
China International Investment Corp warned today that the prospects of the stock markets were gloomy as selling more shares would continue to be a major direct financing tool for Chinese firms.
"The supply of new initial public offering will remain more than sufficient for a long time," the leading Chinese investment bank said.
However, with the move by Huijin to stockpile bank shares, investors may need to rethink whether it's wise to abstain from buying shares.
Huijin announced late this afternoon that it has bought shares of the Industrial & Commercial Bank of China, Agriculture Bank of China, Bank of China and Construction Bank of China starting today.
The government-backed firm has a stellar investment record. On September 19, 2008, it announced a similar plan to buy shares of major banks, a move that boosted the Shanghai index to 2,300 points from 1,900 points within a month.
However, at the end of October that year, the index fell again to 1,664 points.
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