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Views differ on trend of key index

THE Chinese mainland's stock market is likely to continue to fluctuate but analysts are divided on the overall movement trend of the benchmark index.

The Shanghai Composite Index dropped 2.21 percent last week after a mid-week daily plunge of nearly 3 percent, the first weekly loss in nearly six weeks.

"Last week's loss was mainly attributed to profit taking after continuous gains," Shenyin and Wanguo Securities Co wrote in a note. "But a technical correction could not change the upward trend due to generally good conditions in market liquidity and first-quarter corporate earnings being better than the previous quarter." The brokerage forecasts the index would still climb amid fluctuations.

But UBS Investment Research gave a pessimistic view by saying the downward trend would continue as transactions will not be active before the May Day break on Friday.

"The A shares and the global markets are reacting to declining corporate earnings in the first quarter, and investors tend to sell off amid growing concerns over the economic outlook," UBS wrote in a note.

"Many companies are to release their first quarter financial reports this week, and most are expected to be worse than expected," Huatai Securities wrote in a note. "This will place pressure on the benchmark index and shares are seen to fluctuate. But blue chips, including financial firms and petrochemical firms, have shown better signs and would curb the drop in the index."


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