Shanghai's main stock index may hover around 5,000 points this week due to concerns of more monetary tightening and weakness in PetroChina.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B chips, lost 1.65 percent to end at 5,007.91 last week.

Shenyin Wanguo Securities forecasts the index to move between 4,850 and 5,200 this week while Huatai Securities sees a range from 5,000 to 5,200, and Everbright Securities projects 4,900 and 5,300 points.

From the start of last week bank and property shares fell after the central bank announced higher reserve ratio requirement for lenders to curb credit growth and on the China Banking Regulatory Commission's proposal on Tuesday for new rules on property loans by commercial lenders.

"It takes time for bank and property stocks to recover as there are still quite big uncertainties on the macro sector," said Qian Qimin, a strategist at Shenyin Wanguo Securities.

Last week's weakness was partly caused by initial share sales of several companies, including China Pacific Insurance, and investors selling their holdings to get funds to buy new stocks.

But analysts said with the unfreezing of unsuccessful subscription funds this week plus a technical rebound which occurred late Friday, the index may be able to rise.

"It's hard to predict a future trend as negative factors and positive ones are fighting with each other," said Mo Guangliang, an analyst at Orient Securities. "But the market is still a bull given the good economy, corporate earnings and liquidity."

In addition, new fund sales, a plan to expand the Qualified Foreign Institutional Investor quota and a strengthening Chinese currency are providing impetus to the market, Mo said.

Still, PetroChina, the largest component stock in the key index, may again disappoint this week.

The giant company had slumped to an all-time low of 29.98 yuan (US$4.07) before closing at 30.55 yuan last Friday.

On its trading debut on November 5, its shares opened at a high of 48.60 yuan.

(Shanghai Daily December 17, 2007)