SHANGHAI (Dow Jones)--China's shares ended slightly higher Monday on hopes that Premier Wen Jiabao's dovish policy remarks over the weekend now open the door for more aggressive easing measures from Beijing, with gains crimped by concerns about the underlying weakness in the nation's economy.
The benchmark Shanghai Composite Index finished up 0.2% at 2348.30, while the Shenzhen Composite Index ended flat at 941.67. Analysts say the Shanghai index, which has been on a downward trend for two weeks now, will likely continue to trade in a wide range of 2300-2400 as investors await concrete policy steps from the government.
"Because the GDP (gross domestic product) growth estimate for the second quarter has dropped below 8%, investors are pretty assured that the government will take whatever steps necessary to maintain at least 8% growth for the year," said Wang Ping, analyst at Great Wall Securities.
Over the weekend, Wen vowed to make growth a bigger priority, saying that China should prevent its economy from a rapid slowdown by decisive policy making.
"No matter the fiscal policy or the monetary policy, we cannot afford to wait and see and miss the right timing," he said. "We must implement the policies in a timely manner if we believe they're the right ones."
While the remarks did boost stocks by the session's close, the gains were rather muted.
Some analysts continued to underscore the recent weakness in April economic data. "We still need to wait and see whether the impact from the (expected) policy measures will be sufficient enough," said Qian Qimin, analyst with Shenyin Wang Guo Securities.
Property developers were up in reaction to Wen's notably less hawish comments on the real estate market. The premier said the government still needs to stabilize property market regulation policies. Missing from his speech were mentions of maintaining curbs on apartment purchases.
"The government has an easier time ramping up investments than boosting exports and consumption levels," said Soochow Securities analyst Zhu Haomin. "In that respect, part of the economic stimulus in light of the premier's speech may come in the form of investments in social housing for the real estate sector."
The Shanghai property sub-index finished up 0.4%.
Among the gainers, China Vanke was up 1.1% at CNY8.67, Gemdale Corporation was up 0.8% at CNY6.41 and Tianjin Reality Development was up 0.3% at CNY3.73.
Outperformers in other sectors included blue chips like Kweichow Moutai, up 2.4% at CNY223.19, Yanzhou Coal Mining, up 0.8% at CNY22.84, and China Coal Energy, up 1.3% at CNY9.17.
-By Chao Deng, Dow Jones Newswires; 86-21-6120-1200; chao.deng@dowjones.com
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