China Shares End up as Positive Greek Election Outcome Boosts ... - Wall Street Journal

        By Esther Fung      

SHANGHAI--China's shares ended higher Monday, as jitters over the global economic outlook took a backseat after the election results in Greece suggest a victory for the pro-bailout New Democracy party, easing fears that Greece would leave the eurozone.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended up 0.4%, or 9.20 points, at 2316.05. The Shenzhen Composite Index rose 1.1%, or 10.40 points to 964.71.

However, analysts said that the stock market rebound may not be sustained for the rest of the week as euphoria induced by positive results from Greece is likely to be short-lived. Problems facing the eurozone are long-term issues, they said, pegging immediate resistance for the Shanghai index at 2330.

"While concerns over Greece's imminent exit from the eurozone have eased, mid-term uncertainties still remain high. We expect the new government to be quite fragile, especially with the (anti-bailout) Syriza party choosing to become the opposition party. The question of whether Greece will exit the eurozone or not will bring continued headwinds to the financial markets," said Wu Jieyun, an analyst at CICC Macro Research.

Cement producers and some property developers were higher, on hopes of a pickup in construction activity after May property price data showed a narrower decline in housing prices.

Based on Dow Jones Newswires' calculations, prices in the 70 Chinese cities in a government survey decreased by a marginal 0.12% on average in May from a month earlier, compared with a 0.25% decrease in April and a 0.29% decrease in March. On a year-on-year basis, prices fell 1.23% on average in May, accelerating from a 0.94% decrease in April.

"The slight rebound in transactions in some cities and slower price declines have boosted sentiment, but that doesn't mean prices would continue to rise too much, since the government is unlikely to loosen its grip on speculative activity," said Matthew Fang, an analyst at Guosen Securities.

Cement producer Zhejiang Jianfeng Group was up 2.9% to CNY12.95 and Anhui Conch Cement rose 1.4% to CNY16.21.

China Vanke, the nation's largest property developer by sales, rose 0.9% to CNY9.19 and Shanghai-based developer Gemdale Corp. climbed 0.6% to CNY7.06.

Inner Mongolia Yili Industrial Group, however, extended its losses for the second straight session, falling 4.7% to CNY20.82 after its 10% limit-down loss on Friday. This follows a company statement Thursday that said it has recalled some tainted milk powder products.

The July index futures contract, the most actively traded of the four index futures contracts traded in China, ended up 0.5% at 2572.4.

The futures are referenced to the CSI-300, an index of 300 Shanghai- and Shenzhen-listed yuan-denominated A shares. The CSI-300 ended 0.5% higher at 2581.21.

Write to Esther Fung at esther.fung@dowjones.com