SHANGHAI: The stock market recovered 0.47 percent yesterday, despite the announcement of an 8.7 percent jump in the CPI for February.
The Shanghai Composite Index fell 2 percent to 4063.47 points in morning trade, before recovering in the afternoon session to close at 4165.88, up 19.58 points. Gainers outnumbered losers 610 to 244.
Analysts said 4000 points was the barrier for many bargain hunters to snap up stocks.
According to statistics from TX Investment Consulting Co Ltd, the average price-earnings ratio of A-share companies was around 23 times their projected earnings in 2008, when the index was around 4000 points.
The Shenzhen Component Index dropped 0.32 percent, or 47.33 points, to close at 14815.72. Turnover on the two bourses amounted to 115.82 billion yuan, down 19.6 percent from Monday.
Analysts said the stock market may fluctuate further in the weeks to come, with more tightening measures expected after the government announced the fastest monthly CPI increase of 8.7 percent in almost 12 years.
"We expect the latest inflation data to dampen sentiment in the near term and renew investor concern about the government's ability to control prices," Jing Ulrich, chairman of JPMorgan Securities China Equities, said.
Ulrich said higher-than-expected inflation figures have made investors nervous about growth prospects for companies that face rising costs. With prices rising for a range of commodities from grain to iron ore, midstream processors such as electricity generators and refiners will face considerable margin pressure in 2008.
But only a modest interest rate increase is expected because of the widening interest rate differential between the yuan and other currencies, which could attract unwanted capital inflows, analysts said.
Meanwhile, mutual funds' weak performance this year is expected to further dampen investor enthusiasm for new mutual fund subscriptions, which may lead to a slowdown of capital inflows to the stock market, analysts said.
Zhou Liang, head of Lipper China Research, advised investors to lower domestic fund portfolios because the market still faces liquidity pressure.
The increase of fund classifications slowed in February. Equity funds rose only 1.2 percent, while mixed-asset aggressive funds increased 1.04 percent, according to Lipper, which tracks the performance of mutual funds.
QFII A-share funds posted an average loss of 1.26 percent, while the net assets of 19 QFII funds dropped sharply to $6.66 billion.
Source:China Daily
|
Comment
Tell A Friend
Print Format
Save Article