SHANGHAI (Dow Jones)-China shares snapped two straight sessions of gains to end lower Wednesday, as expectations for new aggressive stimulus measures from Beijing waned following a report from the state-run Xinhua News Agency.
The benchmark Shanghai Composite Index dropped 0.2% to 2384.67, while the Shenzhen Composite Index edged up 0.2% to 964.26.
Analysts continued to cite the weak domestic economy and uncertainty in the eurozone as the top two factors weighing on the market. They said they expect the Shanghai index to trade within a narrow range of 2300-2400 in the short term.
"We still see the market as being in a transformational stage...systemic and structural risks make a strong bull market unlikely," said Shenyin Wanguo Securities analyst Li Xiaoxuan.
Meanwhile, the Xinhua report on Tuesday further damped market sentiment.
The latest set of measures from Beijing, ranging from big project approvals to tax reforms and special subsidies consumer purchases, had raised hopes that the government may introduce further measures in an attempt to turnaround a slowing economy. However, the Xinhua report downplayed what has seemed like a big push by Beijing to achieve high growth, saying that authorities want to avoid inefficient investments and keep inflation in check.
In particular, it said the scale and direction of the latest government measures are "notably different from" the massive stimulus package rolled out in 2008 to combat the global financial crisis.
"Investors still expect the government to do all they can for the economy, but they know it will pale compared to the scale of the reaction in 2008," said Han Hao, chief investment consultant at Goldstate Securities, adding that "the government's measures can only help the market go up in the short run, as seen on Monday and Tuesday."
Construction-related stocks, which had gained strongly in recent sessions on expectations for infrastructure-focused stimulus from Beijing, began to pull back as some investors stepped in to take profit.
China First Heavy Industries ended 0.8% lower at CNY3.67, Tengda Construction Group fell 3.4% to CNY3.40, and China Gezhouba Group lost 0.9% to CNY7.60.
Helping the market on the upside, however, were green-energy related stocks. The gains came after a report by the Economic Information Daily, the nation's environmental protection agency, said China may impose additional taxes on polluting products as part of efforts to make the country's economy more environmentally friendly.
Beijing Water Business Doctor, a provider of water treatment system designs and services, gained 4.7% to CNY24.53. Eguard Resources Development climbed 4.9% to CNY22.75, and Dongjiang Environmental closed 4.6% higher at CNY52.12.
-By Chao Deng, Dow Jones Newswires; 86-21-6120-1200; chao.deng@dowjones.com
No comments:
Post a Comment