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Shanghai shares likely to decline this week

(Shanghai Daily)
Updated: 2007-02-12 09:20

Shanghai's stock market is expected to drop this week due to profit taking on over-valued big caps, analysts said.

Analysts predicted the index will hover around 2,700 for some time as the market awaits new listings to gain ground following strong gains in heavily weighted blue chips.

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The Shanghai Composite Index, which groups yuan-denominatedA sharesand hard-currencyB shares, grew 2.14 percent last week to 2,730.39, after tapping an intraweek high of 2,751.16 on Thursday. The weekly transaction volume was 338.8 billion yuan (US$43.7 billion), down from the 405.6 billion yuan a week earlier. The index, which more than doubled last year, has gained 2.05 percent since January.

The A-share index advanced 2.08 percent to 2,866.65, while the B-share index jumped 10.47 percent to 175.45 amid market speculation for a trialmergerof B chips with A shares, which may start after the Chinese New Year holiday.

"We expect adjustments to dominate the market in the coming week as investors unload shares to pocket profits," said Zhang Qi, an analyst at Haitong Securities Co. "Big caps will lead the losses as many are seen as overvalued by investors."

Big caps in Shanghai were hit hard late last week over profit taking. China Petroleum & Chemical Corp, Asia's top refiner, eased 2.67 percent to 8.37 yuan on Friday. The refiner plunged 7.51 percent on the entire week.