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Doubts abound in stock market
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Uncertainties ruled the stock market yesterday, pushing the index down 1.5 percent and sharply shrinking turnover on the two mainland bourses.


"Many institutional investors are standing on the sidelines, wondering where the stock market is heading from here," Essence Securities analyst Zhu Haibin said.


"Many mutual funds want detailed statistics to support their investments for the next year, but as researchers, we aren't sure, because there are many uncertainties in the international marketplace."


The benchmark Shanghai Composite Index dropped 79.49 points to 5214.23, dragged down by large-cap stocks. Losers outnumbered gainers by 623 to 212. The Shenzhen Component Index fell 1.41 percent, or 239.29 points, to close at 16748.19.


The turnover on the two bourses shrank 15 percent to 100.1 billion yuan yesterday, according to statistics from TX Investment Consulting Co Ltd.


Analysts said that the fall was triggered by the decline of the Hong Kong stock market, which sunk 4.15 percent to 26618.19 after the US Federal Reserve trimmed its economic growth outlook.


Other Asian markets also took a dive. Japan's Nikkei Index dropped 2.46 percent to 14837.66, and Singapore's Straits Times Index fell 2.65 percent.


Analysts said that the mainland markets' decline was exacerbated by the online subscription of China Railway yesterday, which diverted chunks of capital from the stock market.


Large-cap, dual-listed stocks fell the most in yesterday's trading. The Industrial and Commercial Bank of China dropped 2.57 percent to close at 7.95 yuan, and its H share fell 4.575 percent to close at HK$5.84. PetroChina slid 1.66 percent, and its H share dropped 3.5 percent. China Life tumbled 2.15 percent, and its H share plummeted 5.75 percent.


Some analysts and economists said the profit increase would not be sustainable in a down market, because a substantial portion of it came from gains from share investments and asset inflation.


"Our research showed that earnings of domestic A-share market listed companies were largely inflated by investment and non-operational incomes and may not sustain," Morgan Stanley economist Jerry Lou said in a report yesterday.


(China Daily November 22, 2007)


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