Stocks News
- Stocks mixed after policy fears fuel wild ride
Date: 29-Jan-2007 Sources: (Shenzhen Daily)
DOMESTIC stocks ended mixed Friday after swinging wildly in response to fears that the government viewed the market's bull run as excessive and had decided to cool it down.
In one of the most volatile days since its rally began last May, the benchmark Shanghai index plunged 4.78 percent in the morning before rebounding to stand 1.70 percent higher 20 minutes before the close.
It finished 0.88 percent up at 2,882.558 points, with losers narrowly outnumbering gainers 446 to 390. On Thursday, the index dropped 3.96 percent, its biggest daily loss since last July.
Turnover was heavy at 83.6 billion yuan (US$10.8 billion) Friday, though down from 92.0 billion Thursday.
'The market's outlook for 2007 is still good,'said Zhou Lin, analyst at Huatai Securities, citing strong economic growth and the approach of the Beijing Olympics in 2008, which could spur consumer spending, tourism and construction.
But he added that in the short term, the market would remain vulnerable to more falls as investors took profits from last year's 130 percent surge.
'Next week we could still see drops as big as the ones yesterday and today,'Zhou said.
Technical signals were mixed. The index's rebound above its 14-day average at 2,832, support since mid-August, was positive. But extreme volatility often presages the end of a bull run, while 14-day momentum has been trending down throughout this month, implying the rally may be losing steam.
The early tumble Friday was caused by signs that authorities were prepared to take a series of measures to cool stocks in order to avoid the formation of a dangerous bubble.
The government will set up an information network to monitor State-owned firms' stock investments, the China Securities Journal quoted Li Rongrong, head of the State-owned Assets Supervision and Administration Commission, as saying.
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