Shanghai shares/close -- 2 (A-shares seen rangebound below record high)

Chen Shuohong, assistant director at Ping'an Securities' Research Centre, said that in recent weeks, the composite index has failed four times to break above its record high at 2,131.98, and now seems likely to remain rangebound below this level for an extended period.	    "It's not the right time now for the market to create a record high. International markets are very weak, and this is bound to have some impact on domestic sentiment," he said.	    There is also a risk that B-shares, which are currently trading at "very high levels," will undergo a major correction, he said.	    One analyst at Shenyin & Wanguo Securities said some of the institutions which play a key role in the B-share market have already taken profits following several weeks of B-share gains, and are now seeking other investment opportunities, particularly in China-related Hong Kong shares.	    Ping'an Securities' Chen said investors are also concerned by rumours that the government will soon launch a policy of floating state shares.	    "It's believed that the government will not sell off the state shares directly via the stock market but will first sell them to institutions of some kind, investors still fear this will be negative. 	    "Since the impact of such a measure is unknown, a lot of investors would rather watch than act at this stage," he said.	    Concerns over the outlook for Sino-U.S. relations following the collision of a U.S. navy aircraft and a Chinese fighter jet added to the cautious mood, he said.	    "Although investors believe this issue will eventually be resolved, they still feel there is some risk of damage to the Sino-U.S. relationship,particularly in terms of economic cooperation," Chen said.	    Qinghai Securities analyst Wang Xiaopeng said index gains are no longer a reliable indicator of investor sentiment since it is easy for institutions to generate gains merely by pushing up the prices of key index shares.	    Although prices have trended higher, there have been few strong positive leads, he said, adding that underlying sentiment appears cautious amid concerns that the launch of a policy of floating state shares will offset the positive impact of the expected launch of several open-ended securities funds.	    Sichuan Changhong declined 0.15 to 11.95 on 5.7 mln shares.	    Wang said the stock came under pressure from institutional selling after reporting a weak result for 2000, adding that analysts expect the company to face funding difficulties, since its return on net assets is now lower than the 6 pct required for companies to qualify to issue additional shares.	    Shanghai Raw Water rose 0.27 to 9.7 on 9.1 mln shares, while Heilongjiang Electric Power gained 0.29 to 10.7 on 14.4 mln shares and Northeast Expressway was up 0.18 to 7.33 on 13.7 mln shares.	    Baoshan Iron & Steel dropped 0.01 to 5.7 on 9.4 mln shares, while Laiwu Steel fell 0.27 to 12.9 on 4.2 mln shares and Maanshan Iron & Steel dropped 0.03 to 4.06 on 3.4 mln shares.	    Among B-shares, Zhejiang Southeast Electric Power gained 0.02 usd to 0.813 on 21.9 mln shares, while Heilongjiang Electric Power rose 0.013 to 0.837 on 10.2 mln shares.	    Shanghai New Asia gained 0.024 to 0.809 on 10.6 mln shares, while Worldbest Kama was up 0.03 to 0.733 on 13.6 mln shares and Shanghai Erfangji rose 0.007 to 0.615 on 8.7 mln shares. 

Related stock : (NIL)