Yet again, the Shanghai Composite Index CN:000001 -0.89% headed to fresh multiyear lows Wednesday, trading 0.8% lower in the early afternoon after ending the morning at its lowest intraday level since January 2009.
Wednesday’s weakness follows Tuesday’s upbeat data showing profits at large industrial companies jumped 20.5% in October from a year earlier, as investors worried the numbers made it less likely that Beijing would offer credit-stimulus measures to support the economy in the immediate future.
Uwe Parpart, chief strategist at Reorient Financial in Hong Kong, said another big factor weighing on the market included concerns that untraded shares in state-owned corporations could soon be released to the public.
“It is the equivalent of a monetary overhang that could, at any given time, be released into the market, so it’s like a Damocles sword hanging,” he said.
Unlikely most other major stock markets, retail investors dominate in China in terms of their holdings in actively traded shares, while institutional investors are less prominent.
Parpart said this fact means China’s domestic market is more prone to crowd psychology and thus more vulnerable to selling pressure in spite of convincing data showing conditions are stabilizing.
Parpart wasn’t convinced the crowd was right, however, saying the Shanghai market was “a very compelling buying opportunity right now,” despite its downward trajectory.
No comments:
Post a Comment