Top Biz News

Market rebounds, but sentiment remains weak

By Zhang Ran (China Daily)
Updated: 2006-08-09 08:49

A slew of new capital-raising activities including IPOs, seasoned offers and the trade of previously locked-up shares will see the supply of new shares exceeding demand.

From August, some listed companies will be able to trade shares that were previously locked up in the securities reform. The combined total of locked-up shares that could be traded on the market is 33.9 billion yuan (US$4.24 billion) in August, 10.4 billion (US$1.3 billion) in October, 14.5 billion (US$1.81 billion) in November and 16.8 billion (US$2.1 billion) in December, according to CITIC Securities estimates.

"It put pressure on the market, especially in August, which saw the largest amount of such shares trading," Wei said.

Anticipation of the government's tightening measures on the fast-growing economy, especially the property market, will also have a negative impact on the market.

The National Development and Reform Commission (NDRC) yesterday reported a new cycle of overheated investment had occurred, with fixed-assets investment worth over 500,000 yuan (US$62,500) exceeding 1 trillion yuan (US$125 billion) for the first time in June, a 33.9 per cent rise year-on-year.

The NDRC suggested a series of interest rate rises to cool down the overheated economy.

"I think the third quarter will be the weakest period of the market, but there certainly are some investment opportunities in the second half of the year," Wei said.

Meanwhile, anticipation of a flat financial result overall for listed companies in Shanghai and Shenzhen in the first half of this year will not add much confidence for investors.

Analysts expected that the over 1,000 domestic listed companies would probably see a combined 5 per cent loss in the second quarter compared with the same period last year. This is much better than that of the first quarter, which saw a 13.3 per cent loss year-on-year.