Most Chinese shares rose on Tuesday, extending two days of sharp gains, but profit-taking in heavily weighted blue chips such as China Life Insurance and Sinopec pulled down the main index. The Shanghai Composite Index ended down 0.53 percent at 2,846.117 points after moving very narrowly. It surged 6.58 percent in the previous two days.
Rising A shares in Shanghai outnumbered losers by 496 to 403, while turnover in Shanghai A shares remained moderate at 65.0 billion yuan ($9.5 billion) against Monday's 69.5 billion yuan. A technical breakout on Monday provided further evidence that the market may have found a longer-term floor at this month's 17-month low of 2,566 points. The index triggered a bullish symmetrical triangle formed by this month's highs and lows, and pointing above 3,000 points.
But the index edged down on Tuesday as blue chips gave up part of their recent gains. China Life slipped 2.15 percent to 26.33 yuan, and Sinopec lost 2.13 percent to 11.01 yuan. "The technical signals are good but there is still resistance in the 2,990-3,000 area, and turnover is not very active so some investors still worry that the rally may be short-lived, as has happened several times recently," said Chen Jinren, analyst at Huatai Securities.
The China Securities Regulatory Commission said late on Monday that it was stepping up monitoring of sales of shares made tradable by the expiry of lock-up periods, in order to enforce rules designed to minimise the impact of such sales on prices.
This, and rumours that authorities might be taking covert action to support the market, such as having government-linked institutions buy stocks, suggested authorities wanted to prevent any sharp fall of shares before and during next month's Beijing Olympics. Hong Kong's South China Morning Post reported on Tuesday that the Chinese leadership planned an urgent meeting to discuss policies to cope with a budding slowdown in the economy.
Such a meeting could produce some relaxation of economic tightening policies, which might be positive for the stock market. But some investors think any policy shift might simply underline that the economic slowdown was serious. Smaller brokerage shares outperformed on Tuesday with Guoyuan Securities soaring its 10 percent daily limit to 18.93 yuan, while Northeast Securities jumped 9.56 percent to 23.27 yuan.
They were apparently helped by better-than-expected first-half results from industry leader CITIC Securities on Monday. FAW Car gained 1.42 percent to 8.55 yuan after reporting its net profit in the first half of 2008 tripled. Bank of Nanjing climbed 1.36 percent to 11.15 yuan after estimating net profit rose over 125 percent in the first half.
Comments
Comments are closed.