Shanghai stocks may remain weak in the short term after suffering their largest monthly decline in more than 13 years in November, analysts said.
The Shanghai Composite Index, which covers yuan-denominated A shares and hard-currency B stocks, fell 2.63 percent to close at 4,871.78 on Friday. For November, the benchmark tumbled 18.19 percent, the largest monthly percentage drop since July, 1994.
Huge subscriptions locked up by the initial public offerings of China Railway Group and several other firms were unfrozen last week. But Zhang said he didn’t expect to see any massive funds returning to the market any time soon.
The IPO of China Railway, the world’s third largest construction company, attracted about 3.38 trillion yuan (456.7 million U.S. dollars), a record for a mainland stock exchange.
From this week, several IPOs, including that of China Shipping Container Lines Co, are set to start trading in Shanghai, which will further soak up liquidity in the market.
“The new IPOs are coming together, and people tend to do more selling to buy new stocks. There may be a small rebound, but the whole picture is still feeble,” Zhang Gang, a Southwest Securities analyst, said.
Wang Antian, an analyst at Guohai Securities, wrote in a note that the index should move between 4,800 and 5,500 points this week. But he cautioned that a bear market may loom should the index fall below 4,800 in the short term.
The gauge is now heavily dominated by newly-listed PetroChina Co, which accounts for more than 20 percent of the index’s weighting. The oil major, the world’s biggest firm by market value, plunged 4.63 percent to 31.52 yuan last Friday, against its opening price of 48.6 yuan at its November 5 Shanghai trading debut.
“PetroChina, plus other blue chips, has been weak, significantly pulling down the index,” said Yang Ming, a Shanghai Securities analyst, who predicted the index may range between 4,750 and 5,050 this week.
“There is no immediate sign PetroChina will stop declining,” said Liu Jingde of Cinda Securities. “It may bounce back, but in mid term we have a target price of 24 yuan for PetroChina.”
Still, Liu expects a technical rebound for the index this week. (Shanghai Daily)
(Source: en.beijing2008.cn)
