Others News
- Shenzhen exchange warns of bubble
Date: 5-Sep-2007 Sources: (Shenzhen Daily)
THE Shenzhen Stock Exchange has warned investors of a bubble behind the soaring profits reported by companies.
By the end of August, 487 out of the 488 companies listed on the main board of the Shenzhen Stock Exchange had issued their financial reports for the first half of 2007. These firms posted a combined net profit of 47.5 billion yuan (US$6.25 billion), almost double the figure recorded at the same period last year.
The Shenzhen exchange, which is only less than one third of the Shanghai Stock Exchange in terms of market capitalization, has a total of 632 listed companies.
'Although listed companies achieved rapid growth, investors should still beware of hidden bubbles behind the profit surge and invest in a prudent and rational manner,'the exchange said in a report issued Sunday.
The exchange said listed companies relied too much on investment gains in the stock market and the prospects of a continued profit increase are doubtful.
The ratio of business revenue to profit fell 27 percent year on year while that of investment gains to profit soared 50 percent, said the report.
The report said that 138 companies saw their half-year profits drop compared with the same period last year and another 100 were still in the red.
The continued rise in share prices has gotten securities regulators worried.
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