Markets Recover from Early DeclineA flood of new issues in China's stock markets weighted down indices early last week until a sharp upswing on Friday as concerns for quick market expansion gradually eroded.Shanghai's composite index rose 37.155 points to 1,932.792 last week. Trading volume of the week was 52 billion yuan (US$6.3 billion). Shenzhen's composite sub-index also gained 13.66 to 4,753.03 on weekly turnover of 52 billion yuan (US$6.3 billion). The markets closed sharply down on Monday. Analysts said investing sentiment was dampened by a flood of newly floated shares and a series of planned initial public offerings. The government floated a second batch of rights shares derived from State holdings in eight Shanghai-listed companies last week. Such shares had not been tradable for years, but the government listed the first batch in April as part of efforts to create a healthier market. The about 10 initial public offerings scheduled for the week, including five A-share firms and one B-share company on Monday, triggered more selling. "There are too many shares in the market,'' said a broker at Guotai J&A in Shenzhen, "That brought down the A shares, which in turn pressured the B-share market.'' The indices closed higher in thin trade on Tuesday as investors were taking sidelines, awaiting new market leads and announcements from newly listed companies and IPOs, as well as release of the mid-year results, which has heightened earnings concerns. China's securities regulators require listed firms to announce their interim results between July 1 and August 31. More than 40 companies are forecasting losses, including three B-share firms -- Shanghai Huili Buildings Materials Co, Shenzhen-listed China Bicycles Company (Holdings) Ltd and light industrial Shenzhen Lionda Holdings. Market correction in the next two days further pulled down the indices, but analysts said in spite of the consolidating, the trend is still heading up in the medium run. One new share on Shenzhen's B-share market and four on the A-share bourses on Thursday diverted some funds away from the established shares. Shares in Foshan Huaxin Packaging Co, the first IPO on China's B-share market in a year, soared 20.2 per cent to HK$2.02 (US$0.26) on Thursday's close against an initial offering price of HK$1.68 (US$0.22) with a heavy turnover of HK$80.54 million (US$10.24 million). However, a strong technical rebound on Friday pushed up the indices again as some investors shifted funds back to established counters. A Homeway analyst said steel and iron stocks were among the most active and top gainers last week, partly due to the good profit record of the steel companies. Shanghai's B-share index was up 0.035 of a point to 54.856 last week. Shenzhen's B-share sub-index was off 9.55 points to 743.47. Analysts said the markets will maintain a uptrend this week. |
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