Shanghai shares/close -- 2 (air collision little impact on market: analyst)
One analyst at a domestic securities firm said the news of a collision between a U.S. navy aircraft and a Chinese fighter jet had little impact on sentiment. The incident reportedly caused the Chinese fighter jet to crash, leaving the pilot missing, and forced the U.S. Navy aircraft with its 24 crew to make an emergency landing on Hainan Island. The analyst said the incident suggests that the Chinese and U.S. military were involved in a "trial of strength", but added that since there seems to be no clear evidence of which side was in the wrong, he does not expect it to have much impact on Sino-U.S. relations. The analyst said investor confidence has strengthened as the reporting season progressed, noting that the results published so far showed average earnings per share growing by about 30 pct. The strong results have lowered companies' price-to-earnings ratios, laying the basis for further price gains, he said. He added that investors have been focusing on companies' overall earnings figures, and have paid little attention to the fact that much of the improvement in earnings was due to extraordinary gains from asset restructures, as well as increased income from companies' own investments via the stockmarket. Nonetheless, confidence continues to be undermined by concerns that the government will soon begin the flotation of listed companies' state shares, in order to raise funds for social security, and will proceed with plans to launch a second board stockmarket, he said. Recent news that the government is close to allowing the launch of open-ended securities funds has triggered concerns that the government will use the funds to cushion the negative impact of the launch of other policies, including the flotation of state shares or the launch of the second board, he said. Great Eagle Securities analyst Ma Jian said sentiment appeared cautious as the composite index rose close to its record high, and turnover remained little changed from previous days, although it might have been expected to strengthen amid a surge in buying as prices approached record highs, he said. Although B-shares rose to a record high, turnover was slightly thinner than seen in recent days, he said. This suggests that many investors who recently took positions in B-shares are reluctant to sell until further gains have created leeway for profit-taking, he said, adding that many B-share holders have high hopes of further gains. Newland Securities analyst Yu Ziqian said that although investors are generally positive about the market's upside potential over the longer term, retail buying was limited amid a lack of outstanding leads. He said retail investors are little concerned about the risk of a major correction, since recent experience has indicated that the government is prepared to take action to prevent price declines whenever confidence appears to waver. Yu also noted that securities investment funds will need to raise their cash positions in preparation for the payment of a combined 15-16 bln yuan in dividends on their 2000 results, so the funds may seek to drive share prices higher in the near term, as they prepare to trim their holdings. China Minsheng Banking rose 0.52 yuan to 18.68 on 15.1 mln shares, while Shanghai Pudong Development Bank gained 0.35 yuan to 21.33 on 2.2 mln shares. Baoshan Iron & Steel gained 0.01 yuan to 5.71 on 13.8 mln shares, while Maanshan Iron & Steel rose 0.04 yuan to 4.13 on 5.1 mln shares. Shanghai Automotive rose 0.25 yuan to 13.52 on 10.4 mln shares, while Sichuan Changhong rose 0.15 yuan to 12.44 on 6.8 mln shares. Shanghai Petrochemical gained 0.05 yuan to 5.16 on 5.5 mln shares. Among B-shares, Shanghai Chlor-Alkali rose 0.018 usd to 0.619 on 25.7 mln shares. Zhejiang Southeast Electric Power rose 0.009 usd to 0.777 on 18.2 mln shares, while Heilongjiang Electric Power gained 0.004 usd to 0.864 on 10.9 mln shares. Jiangsu Wuling Diesel gained 0.011 usd to 0.611 on 10.5 mln shares.
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