Stock woes weigh on yuan
(Reuters)Updated: 2007-03-06 11:40
Fundamentals Strong
Chinese shares tumbled in line with a 4-percent drop in Hong Kong and falls in other markets, but by the close they recovered most of their intraday losses, boosted by officials' comments at the parliamentary session.
"Figures released during the parliamentary session indicate that economic fundamentals remain strong, so the index will certainly test new highs again this year," said economist Zhu Jianfang at China Securities.
"But the stock market is likely to be more volatile this year, even with periods of roller-coaster trading, mainly because of heavy profit-taking pressure," he said.
The stock index has dropped 8.7 percent from an all-time intraday peak of 3,049.771 points hit last Tuesday. Its volatile trade last week, including an 8.8 percent tumble by the close on Tuesday, rattled global markets.
The benchmark index climbed 130 percent in 2006 and many analysts consider it vulnerable to bouts of selling by investors who want to lock in profits from those gains.
Premier Wen Jiabao said in a keynote report to the parliament Monday that the
government was working on the assumption that gross domestic product would grow about 8 percent this year,
the same target it set last year when GDP actually rose 10.7 percent.
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