Stocks likely to benefit as liquidity rises
By Feng Jianmin |
July 4, 2011, Monday
|
Print Edition
Print Edition
ANALYSTS said Shanghai's stock market may continue a mild rebound this week as sentiment and liquidity improve although they cautioned that high inflation remains a concern.
The Agricultural Bank of China said in a report last week that the inflation may peak in July at 6.4 percent, but will slowly moderate in the rest of the year.
"The market is prepared for another interest rate hike in the short term, and there will be fewer monetary tightening measures in the second half of this year," said Yi Xiaobin, an analyst at China Galaxy Securities Co.
Yi said concerns over the European debt crisis eased after Greece's five-year austerity budget passed.
Meanwhile, the seven-day repurchase rate, an indication of the shortage of money among banks, decreased to 5.9 percent last week from 8.67 percent the previous week after the central bank poured in 120 billion yuan through open market operations.
"The toughest time for liquidity this year is passing," said Zhang Li, an analyst at Huatai Securities. "Investors can start buying shares with low valuations."
Still, analysts cautioned that the rebound may be limited as it will take time to see whether inflation drops and monetary policy loosens.
"The market is sensitive about possible changes in monetary policy," said Chen Jian, an analyst at Caitong Securities.
The Agricultural Bank of China said in a report last week that the inflation may peak in July at 6.4 percent, but will slowly moderate in the rest of the year.
"The market is prepared for another interest rate hike in the short term, and there will be fewer monetary tightening measures in the second half of this year," said Yi Xiaobin, an analyst at China Galaxy Securities Co.
Yi said concerns over the European debt crisis eased after Greece's five-year austerity budget passed.
Meanwhile, the seven-day repurchase rate, an indication of the shortage of money among banks, decreased to 5.9 percent last week from 8.67 percent the previous week after the central bank poured in 120 billion yuan through open market operations.
"The toughest time for liquidity this year is passing," said Zhang Li, an analyst at Huatai Securities. "Investors can start buying shares with low valuations."
Still, analysts cautioned that the rebound may be limited as it will take time to see whether inflation drops and monetary policy loosens.
"The market is sensitive about possible changes in monetary policy," said Chen Jian, an analyst at Caitong Securities.
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