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Tough times forecast for China's exporters

By Allen Wan (China Daily)
Updated: 2010-06-30 10:52

SHANGHAI - China's exports face "strong headwinds" in the second half of the year from policy tightening measures and the European debt crisis, reducing prospects of a rebound in the stock market, Citigroup Inc said.

Investors monitor share movements at a brokerage in Ningbo, Zhejiang province. [JIA DONGLIU / FOR CHINA DAILY]

Chinese stocks will probably stay "range-bound" pending clarity on policies and the economy, Shen Minggao, head of China research at Citigroup, said on Tuesday. The Shanghai Composite Index slid for a fifth day on Tuesday, falling 4.27 percent to 2427.05.

"While low valuations are attractive in the near term, risks lurk in terms of earnings downgrades or policy reversal," Shen said.

Related readings:  Chinese stocks slump 4.27% to 14-month low Tuesday  Economist says RMB policy needs fine-tuning  China stocks 'range-bound' on exports, Citigroup says  European debt crisis may hurt China's exports

The government is seeking to sustain the nation's expansion while cooling property prices after record credit growth increased concern that inflation will accelerate.

The Shanghai Composite has tumbled 23 percent this year, the most after Greece and Cyprus among the 93 indexes tracked by Bloomberg.

Central banker Yi Gang said on June 28, the nation's monetary policies are flexible and could be either tightened or loosened.

Analysts are split on whether the People's Bank of China will raise interest rates this year from crisis levels as the world's third-biggest economy surges back from the financial crisis, a Bloomberg News survey showed last week.