Key share index may extend its gains
(11.07.2011)

Shanghai stocks may extend gains this week as investors expect China’s monetary policies to moderate, which can give a boost to the market, while there are hopes that inflation for October may weaken.

A survey among 10 brokerages by the China Securities Journal showed that none of them expect the market to fall this week. Five of them predicted a rise while the rest said the market may be flat.

The Shanghai Composite Index climbed 2.2 percent last week to close at 2,528.29.  The barometer jumped more than 6 percent the week earlier.

Galaxy Securities, which forecast the Shanghai index to rise to 2,600 points this week, said the rebound may continue in the market where valuations have fallen to a low level. It also said that the overall liquidity situation has started to improve after Premier Wen Jiabao pledged that the government will fine-tune its anti-inflation tightening measures.

But Shenyin Wanguo Securities was more concerned about a raft of economic data that are to be released this week.

The Shanghai-based brokerage estimated the two-week gains may stop and the index seen hovering around 2,500 points.

Whether China’s inflation falls notably in October may have a direct impact on the government’s decision to change its monetary policies, which will influence the market, according to the broker.