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Sentiment likely to keep stocks down

By Yu Xi  (Global Times)

08:21, July 30, 2012

Chinese markets ended with slight gains Friday thanks mainly to strong increases from heavily weighted banking, coal and media stocks, although anxieties about the domestic economy will likely continue to loom large in the minds of investors in the near term.

The Shanghai Composite Index finished trading at 2,128.76 points Friday, up 2.76 points, or 0.13 percent. Meanwhile, the Shenzhen Component Index closed out last week at 9,087.13 points after adding 5.23 points, or 0.06 percent, Friday.

The Shanghai Composite Index and Shenzhen Component Index declined 1.84 percent and 2.64 percent respectively week-on-week.

Both markets kicked off last week with heavy losses, with the Shanghai Composite Index skidding to its lowest point in six months. Guo Shuqing, head of China's securities regulator, said during meetings in Jilin and Liaoning provinces on July 19 and July 20 that listed companies and regulators should respect and protect investors' interests, but this statement did little to revive fading investors' confidence, said analysts.

Markets got a slight nudge Tuesday on the back of gains in Nanjing-based companies after the city's government announced that it would be rolling out polices to boost local consumption. The release of HSBC's flash manufacturing purchasing managers' index (PMI) for July also contributed to Tuesday's victory. The headline reading rose to 49.5, up from 48.2 during the previous month.

Deepening concerns about Europe's debt crisis dragged down the Chinese markets Wednesday. Domestic real estate stocks also took a nose dive that day after the State Council announced that it would be sending out eight inspection teams to supervise the implementation of property curbs in 16 municipalities and provinces.

Drops in developer stocks continued to press on the markets Thursday, as central authorities stressed that they would not allow local governments to change or adjust curbs aimed at cooling the country's property market.

Both markets opened higher Friday following good performances in the US and European markets during the previous day and were able to end in the black with solid showings from the banking and coal sectors.

Gui Haoming, chief analyst at Shenyin & Wanguo Securities, warned that weak market confidence would continue to cast a shadow over the markets for a while longer, potentially leading to another wave of losses in the days ahead, according to a report by the China Business News Sunday.


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