Turnover, profits to guide key index

THE fortunes of the key Shanghai Composite Index this week will depend on the results of corporate earnings due to be released and also on whether turnover in the stock market will continue to decline as it had done last week, analysts said.

The index had an accumulative loss of 4.04 percent last week to end at 2,261.48 as investors tended to sell shares to take profit when the index approached 2,300.

Although the Chinese government is determined to bolster economic growth and shore up investor confidence which should give the key index a boost, some corporate earnings results may cause concerns and this is likely to curb the rebound, according to analysts.

Last week the State Council, China's Cabinet, approved stimulus packages targeted at several key sectors, including light industry, petrochemical, electronics and information technology. The market is expecting more forceful economic measures during the annual session of the National People's Congress next month.

But a "falling turnover indicates the market is taking a wait-and-see attitude," United Securities Co wrote in a research note.

The brokerage, however, sees shares "likely to rise with wide fluctuations this week" and forecasts the major technical resistance for the key barometer at between 2,380 and 2,420.

Zhang Xiuqi, an analyst at Guotai Jun'an Securities Co, expected the index to continue advancing and to fluctuate between 2,300 and 2,500.