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Uncertainty Leads to Dull Trading by Investors
The Shanghai and Shenzhen bourses closed slightly up yesterday in dull trade with market sentiment widely divided over where the market is leading in the near future, according to China Daily.
The Shanghai composite index's technical rebound met with pressure at 1,700 points in the morning and wandered narrowly around that level for most of the afternoon session.
The relative strength and stable trend attracted some investors to buy in, which pulled the index up 22.599 points, to 1,700.477, on close. Trade volume stood at a slim 6.77 billion yuan £šUS$817.1 million£©¡£
The Shenzhen composite sub-index rose 35.36 points, to 3,482.35, on lacklustre trade of 3.49 billion yuan£šUS$422.0 million£©¡£
An analyst at Guotai J&A Securities said that market sentiment was sharply divided,with many shares falling to floor prices and some rising to their ceiling.
He said the rebound has injected confidence into the market and could continue to boost rises in the near future.
But a Huaxi Securities analyst said the Shanghai composite index was likely to feel pressure at the 30-day average of 1£¬731 points tomorrow.
"This is a major shadowy level that the index tried vainly to break through after its fall from 2 £¬200 points in late June £¬" he said.
Light buying of small caps also pushed China's hard-currency B shares up slightly £¬ following the tracks of the domestic A-share markets.
Smaller firms £¬ such as retailer Shanghai Friendship Co£¬ which closed up 3.51 per cent£¬ were favoured by institutional investors as prices were easily influenced in the highly speculative stock market £¬ brokers said.
"B shares followed A shares to rise today £¬" said an analyst at Huatai Securities.
"There was light£¬ speculative buying in small companies while the overall market lacked focus £¬" she said.
The Shanghai B-share index closed up 0.64 per cent at 157.105 points on extremely thin turnover of US$21.43 million£¬ down from an already paltry US$31.43 million on Friday.
Shenzhen's B shares were up 0.55 per cent at 253.13 as turnover fell to a tiny HK$117.74 million £šUS$15.1 million £© from HK$164.08 million £šUS$21.0 million £©¡£
An analyst at Haitong Securities said turnover was slim because there were few fresh factors in the market.
"The market is quite flat. People are cautious about the indices' near-term prospects £¬" he said.
Brokers said B-share markets were expected to drift within narrow ranges in the near term £¬ with the benchmark Shanghai B-share index locked between 150 and 160 points.
The markets leapt more than 10 per cent last week in a rally triggered by a regulatory decision to suspend a State share selldown programme that had worried investors for months.
The scheme£¬ which required listing firms to float some state-owned shares to help fund a depleted national pension fund£¬ kicked off in July.
But the positive sentiment has melted away in the face of a continued government clampdown on corruption in the markets and expectations that state share sales would resume after a brief delay£¬ analysts said.
"Technically speaking £¬ the markets still have room to rebound" after heavy falls over the past months£¬ said an analyst at Galaxy Securities. "But sentiment is weak£¬ limiting the potential for the indices to rise further."
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