Shanghai shares/close -- 2 (A-shares seen extending gains: analyst)

Qinghai Securities analyst Xia Yong said he expects the market to remain on an upward trend, since many investors have come to believe that the expected launch of a plan for the flotation of listed companies' state shares will in fact provide a positive lead for the market.

	    A-shares are also supported by hopes that the expected launch of open-ended securities funds will give a strong boost to liquidity, and by hopes that social security funds, and more funds from insurance companies, will also be given access to the stock market soon, he said.

	    Xia added that the current situation, as investors await news of the expected plan for the flotation of state shares, is similar to the situation last year as the government prepared to float listed companies' legal person shares.

	    The initial fears of the negative impact of legal person share flotations subsequently proved unfounded.

	    Likewise, A-share selling pressure should ease once it becomes clear that the state share flotation plan will not have a negative impact on the market, he said.

	    Ping'an Securities analyst Qian Wei said the composite index underwent a period of consolidation after yesterday rising above a key psychological level of 2,200 points, but sentiment appeared firm.

	    Since there is unlikely to be any significant negative news in the near term, shares could ride out further liquidity-driven gains, he said.

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