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Overseas gloom casts shadow over local stock markets

By Yu Xi (Global Times)

08:10, June 15, 2012

The Shanghai and Shenzhen stock markets retreated Thursday following a drop in the US markets Wednesday as Spain's credit rating was downgraded, Credit Suisse Group AG lowered its economic growth forecast for China and concerns about the upcoming elections in Greece dampened market confidence.

The Shanghai Composite Index gave up 22.98 points, or 0.99 percent, to close at 2,295.95, while the Shenzhen Component Index declined 0.65 percent, or 64.75 points, to finish at 9,885.29.

Both markets opened lower Thursday following retreats in the US and European markets. In the morning session, the indices gained slightly thanks to the automobile, medical device and insurance sectors, but quickly sank on drops in the coal and cement sectors. In the afternoon session, the Shenzhen Component Index rebounded briefly on solid showings from the agriculture, food and non-ferrous metal sectors, but was finally dragged down by losses to coal, real estate, banking and securities stocks.

"Major risks still come from overseas and that'll raise the risk premium for equities … earnings have yet to hit bottom because a slowdown in economic growth isn't over," according to a report by Bloomberg Thursday, citing Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co.

The automobile sector got a boost Thursday thanks to a trade-in incentive program announced by the Ministry of Finance and the Ministry of Commerce Wednesday. Specifically, the government will give consumers as much as 18,000 yuan ($2,825.04) in subsidies for each vehicle traded for a new car in 2012. Yangzhou Yaxing Motor Coach Co rose 4.45 percent to 7.74 yuan.


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