The Shanghai stock market fell 2.14 percent yesterday, led by
the financial large-caps, amid concerns about the US credit crisis
arising from the subprime mortgage woes.
Economists and analysts said investors' worries stemmed mainly
from the potential risks to China's economic growth caused by the
possible recession in US resulting from the credit problem, despite
reassuring words from US Treasury Secretary Henry Paulson.
Reuters quoted him as saying the financial system and the US
economy are strong enough to withstand the current crisis without
triggering a recession.
"The concerns about the credit problems overhanging the global
financial markets have, to some extent, disrupted the Chinese stock
market rally," said Zhu Gang, an analyst at Changjiang
Securities.
The benchmark Shanghai Composite Index dropped 104.43 points, or
2.14 percent, to close at 4765.45, with 511 out of 998 stocks
closing lower. Turnover on the Shanghai bourse amounted to 129
billion yuan, down 2.4 percent from the last trading day.
Before yesterday, the benchmark index had held up well against
what has been described as a "gradual meltdown" of global equities.
The main indicator had risen an aggregate 2.5 percent to 4869.88
from last Friday, when ripples of the credit squeeze in the US
began to spread to European and Asian markets.
"The market is conducting a short-term correction," said Zhang
Fan, an analyst at Changjiang Securities. "We expect it to resume
the upward trend when the impact of the US credit squeeze is
digested."
The subprime issue is nothing more than an excuse for the
overdue market correction, the analysts said.
"As a relatively less open market, the subprime issue is not
expected to have as direct an impact on the Chinese equities market
as other overseas markets," said Zhu.
Analysts said global markets would probably take months to
absorb the subprime blow. But no substantial impact is expected on
China's stock market, they maintained.
(China Daily August 17, 2007)
