Economists allay bear market fears
(China Daily)
Updated: 2008-03-04 07:22

China's stock market, despite fluctuating, will not turn bearish, veteran economist Li Yining said yesterday.

"The stock market was bullish in general last year. But as the split-share structure reform has drawn to an end, it may undergo a correction," the 87-year-old member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), said.

Stock market growth will be one of the key topics for discussion among the country's political advisors, who met yesterday afternoon for their annual full session at the Great Hall of the People in Beijing.

The stock market was bullish last year, with the Shanghai Composite Index rising from 2,728 points in January to 5,261 points on Dec 28. The market has since dipped, with the Shanghai exchange closing at 4,349 on Friday, down 1,775 points from the high of Oct 16.

"The plunge was mainly caused by investors' jitters over the influence of the American subprime crisis, macro-control measures to cool the economy and refinancing plans of companies to be listed," Li said.

A lack of experience among new investors also fueled the anxiety, he said.

The trading debut last year of PetroChina contributed to the downward slump, Li said. On news of the listing on Nov 2, the country's major stock index fell 2.31 percent.

Two factors signal a stock market is about to turn bearish: economic recession and the global reaction to a nation's stock market, Li said.

"China's economy is still rising and the world stock market is not bearish," he said.

Xinhua

(China Daily 03/04/2008 page3)