China Shares End Lower for Fifth Straight Session on U.S. Uncertainties
By Wynne Wang, Dow Jones Newswires | Aug. 22, 2011
China's shares ended lower for a fifth consecutive session Monday as investors remained cautious after U.S. stocks notched their fourth straight losing week Friday.
The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.7%, or 18.50 points at 2515.86, after trading between 2507.78 and 2553.42. The Shenzhen Composite Index fell 0.9% to 1124.17.
Analysts said the Shanghai index has limited downside as the large-cap stocks are already trading at very low valuations and they tipped 2437.68, a more-than-one-year low the index hit on Aug. 9, as a short-term support.
"Most large caps are trading at around 10 times price to earnings while some are even trading at eight times," said Amy Lin, an analyst with Capital Securities.
"Investors lack confidence in the market due to weak offshore markets. That's why the stocks are falling though the selling pressure isn't that strong," she added.
The Dow Jones Industrial Average tumbled 4% last week and was down 15% over the last four weeks, while the Shanghai index fell 2.3% last week.
Li Lei, an analyst with Gold State Securities, said the Chinese market has outperformed the offshore counterparts, but "it's still too early to say investors' confidence has been fully restored."
Citic Securities fell 1.2% to 11.87 yuan after it posted a lower-than-execpted first-half net profit. The securities firm's net profit rose 13% to 2.97 billion yuan in the period, but Goldman Sachs said it had expected its earnings to rise 41%.
Airlines are also lower on concerns travel demand will fall on weakening global and domestic economies. China Southern Airlines was down 2.7% at 7.64 yuan and Hainan Airlines fell 1.3% at 6.24 yuan.
The September 2011 index futures contract, the most actively traded of the four index futures contracts traded in China, ended down 0.7% at 2786.2.
The futures are referenced to the CSI-300, an index of 300 Shanghai- and Shenzhen-listed yuan-denominated A shares. The CSI-300 ended 1.1% lower at 2777.79.