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Domestics stocks poised for gains in upcoming week

By Wang Fei'er (Global Times)

08:17, June 04, 2012

Although slumps in heavily weighted sectors and disappointing economic data dampened market sentiment last week, both the Shanghai and Shenzhen markets posted week-on-week gains when trading concluded Friday, thanks in large part to positive signs that the government was determined to turn around the country's slowing economy. With policy in its favor and drops in the banking sector set to ease, mainland markets are likely to see steady rises in the week ahead, say analysts.

The Shanghai Composite Index ended trading at 2,373.44 points last week, up 1.71 percent from the previous week; while the Shenzhen Component Index closed at 10,145.80 points, up 2.64 percent week-on-week.

Yet, several major sectors, notably banking, remained depressed and saw massive outflows in capital last week.

As much as 900 million yuan ($141.27 million) in capital fled the banking sector last week as confidence in the country's financial institutions waned. But, as several banks saw their stock prices hover close to their net asset value (NAV) per share throughout last week, the sector could turn around in the coming days, say analysts.

A flood of companies floating shares in China's A-share market last week also diluted market liquidity, which helped drag down the indices on several occasions last week, said Qian Qimin, an analyst from Shenyin & Wanguo Securities.

The government's denial of rumors that a massive stimulus package would soon be rolled out to revive the sputtering economy also took some of the wind out of the market's sails last week, yet pledges to promote development in strategic industries and subsidize appliance sales in rural areas did give domestic stock an overall boost.


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