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Caution to reign as index seen stagnant
SHANGHAI’S key stock index may continue to be generally stagnant this week as investors remained cautious that the Europe debt crisis may worsen and also on an uncertain macroeconomic situation.
The Shanghai Composit Index capped a third straight weekly loss last week, losing 1.5 percent to 2,380.22 after the preliminary HSBC Purchasing Managers’ Index for November fell to the lowest level in 32 months, indicating slower economic growth.
Market speculation for an easier monetary policy was also quashed after the People’s Bank of China said the government would maintain a “prudent” monetary policy stance despite having cut the reserve ratio by half a percentage point for more than 20 rural credit cooperatives.
Qian Qimin, an analyst at Shenyin Wanguo Securities, expects no change in the weak market sentiment and warned it may even worsen with the spread of the European Union debt crisis to France and Germany while shareholders holding non-exchange-traded shares may sell them which would cause liquidity to tighten.
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