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China Daily Website

Investors eagerly await meeting's outcome

Updated: 2013-11-13 14:26
By Gao Changxin in Shanghai ( China Daily)

Stock analysts said the paramount reform blueprint due late Tuesday will dictate the direction of the Chinese equity market on Wednesday and beyond that, after stocks rose by the most in nearly two weeks on Tuesday.

Their hopes are not too lofty, though, after an economist privy to the blueprint was quoted by local media as saying on Tuesday that "the chances of seeing big surprises will be small".

"I used to be pretty excited, but the government seems to be toning down everybody's hopes gradually as the publish date draws near," said Zhang Qi, a Shanghai-based stock analyst at Haitong Securities Co Ltd.

Tactic-wise, market strategists consulted by China Daily recommend leaving a quarter of your funds in the market, and then make up your mind for the rest after the market opens on Wednesday.

The big picture is that liquidity is still sparse in the stock market, as funds keep flowing into the red-hot property market. And a reopening of initial public offerings, which are stalled for over a year, would further strain liquidity. Unless there's a "big surprise" in the blueprint, said Zhang, the market will remain lukewarm in the near future.

On Tuesday, the benchmark Shanghai Composite Index saw a 0.8 percent increase to 2,126.77 points, the biggest gain since Oct 30. But the trading volume was still low, 34 percent below the 30-day average, after falling to a four-month low on Monday.

The shares of Kweichow Moutai Co Ltd - China's biggest liquor maker - rose 3.8 percent after it announced plans to buy property in France to expand its business portfolio. Shipbuilders also gained after local media reported that the government will make subsidies more accessible to encourage vessel replacements. In the banking sector, blue-chip Industrial and Commercial Bank of China Ltd was almost flat while Ping An Bank Co Ltd jumped almost 5 percent.

The benchmark index lost 4.55 percent in the past month but is up 8.32 percent year to date.

Top Party officials are meeting in Beijing to hammer out a blueprint that is supposed to govern the nation's essential structural reforms over the next 10 years, just as the economy regained traction after heading to its slowest growth in more than two decades.

A statement will be released after the four-day meeting ends on Wednesday. The statement is expected to spell out how and where the reforms will proceed.

Ding Zhenyu, a stock analyst at Shaanxi Jufeng Investment Co Ltd, believes that the market's rock bottom is at around 2,100 points but that there's still a slight chance that the index could dip to as low as 2,050 points.

"The blueprint will be the biggest market mover," said Ding.

 
 
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