The Shanghai stock market is expected to rise this week as it
will be sustained by likely solid corporate earnings and active
transactions, analysts said.
The key Shanghai Composite Index ended last week 2.3 percent
higher at 5,484.6 for its fourth straight weekly gain. Several
securities houses forecast the index could test 5,600 in the coming
sessions.
Shanghai Securities sees the Shanghai index to move between
5,400 and 5,600 for the week, Everbright Securities forecast a
range from 5,400 to 5,700. Guohai Securities is a bit cautious
giving a range of 5,200 to 5,500 while Orient Securities says it
could be between 5,100 and 5,500.
Analysts expect results of corporate earnings to be a catalyst
for the market, as several companies have issued strong profit
forecasts over the past weeks.
"With firms starting to report their annual results, sectors
with good profitability surely will be favored," said Yang Ming, a
Shanghai Securities analyst, adding that metal, bank and brokerages
are among those with rosy earnings estimates.
Chinese mainland-listed firms are required to make preliminary
announcements if they expect to report earnings swings of more than
50 percent. Companies start reporting their annual results this
week.
On Friday, Bank of Beijing led a rally in the banking counter
after the city-level lender said its earnings may have surged more
than 50 percent in 2007. The Beijing bank's profit forecast
reconfirmed investor confidence in the earnings performance of
other lenders in the heavily weighted sector.
Investors are also buying banks after reports said that more
brokerages were considering acquiring stakes in lenders, analysts
have said.
The domestic stock market has bounced back since December
following a two-month correction that started in mid-October when
the Shanghai benchmark hit an all-time high.
Many non-blue-chip stocks had surged more than 50 percent since
December but bank and property sectors have regained
attractiveness.
(Shanghai Daily January 14, 2008)
