Monday, May 04, 2009

Cautious optimism prevails

ANALYSTS remain optimistic, but cautious, on Shanghai's stock market after the May Day holiday as increasing liquidity will support the benchmark index in the long term.

"The index will continue to fluctuate between 2,300 and 2,500 points if there is no new stimulus plan to be announced," said Sun Hongting, an analyst at China Merchants Securities. "The performance of the index will be largely dependent on pharmaceutical shares and Shanghai-based shares but in the long term we're still optimistic given enough liquidity in the market."

The Shanghai Composite Index gained 0.38 percent to close at 2,477.57 last Thursday. The market was shut for the May Day holiday last Friday. The barometer rose a collective 4.4 percent last month.

China's Purchasing Managers Index added 1.1 percentage points last month from the previous month to 53.5.

"Pharmaceutical firms, coal producers and shares linked to the World Expo Shanghai are likely to outperform others," said a Wanlian Securities research note.

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