China's shares rose 0.5 percent on Thursday, snapping a seven-day losing streak as top Asian refiner Sinopec Corp rallied, but traders predict lingering weakness amid unpopular state share reforms. The benchmark Shanghai composite index, which had slid inexorably since June 28, climbed to 1,038.597 points.
Most investors are expected to cling to the sidelines amid pessimism over Beijing's effort to sell over $200 billion worth of non-traded state-held stock in listed firms, which they fear could depress existing shares.
Sinopec, the largest capitalised counter on mainland bourses, jumped 2.9 percent to 3.55 yuan after plumbing its lowest level in a month on Tuesday. China Southern Airlines Co Ltd, the country's largest carrier by fleet, dived 7.1 percent to 2.50 yuan, after industry sources said its parent had lost $133 million in the failure of a Chinese brokerage. "Sky-high oil prices at above $60 per barrel have compounded its woes," said Pei Xiaoyan, an analyst at United Securities. "Fuel accounts for some 12 percent to 15 percent of the total cost of airlines companies."
The index has dropped 18 percent so far this year, surpassing in six months a 15 percent slump over 2004, hit also by factors such as Beijing's economic-cooling steps. Analysts said the market could breach the psychologically crucial 1,000-point level in one or two weeks.