Analysts are divided over the trend that China's stocks will take this week as authorities have repeatedly stressed the importance of a stable market but investors are concerned about an economic slowdown and an influx of new equities.

The Shanghai Composite Index rebounded last Friday afternoon following President Hu Jintao's comment that the priority is to maintain a stable and rapid economic growth. But it still lost 2.21 percent to end at 2,801.82 last week.

Qian Qimin, a strategist at Shenyin Wanguo Securities, said the Friday rebound came amid expectations there would be positive government measures to boost the market. "But investors may keep selling if no such moves come soon," he said. Qian expects the index to range between 2,650 and 2,850 this week.

Analysts expect the market to be under pressure from cash calls for big initial public offerings and the freeing of previously non-tradable shares this month, but they don't expect any other negative policy moves at least before the Olympics which start in Beijing on Friday.

China Galaxy Securities analyst Yi Xiaobin said in a note the index may rise this week to as much as 3,100, if there is a rise in turnover.

A Huatai Securities analyst said the index may fall to as low as 2,500, after it failed to get above 3,000 in several attempts.

"The authorities won't allow a sharp decline, but it's hard for the index to shine because when the Olympics start, attention will turn to the Games."

(Shanghai Daily August 4, 2008)