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Experts pessimistic about China's A-share market

Updated: 2012-04-05 16:17

By Song Jingli (chinadaily.com.cn)

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China's weak A-share market has stirred worries about its future trend.

Xu Yiding from Southwest Securities and Zhang Shiyuan from China Minzu Securities have predicted that the benchmark Shanghai Composite Index may fall below 2,132 points, the lowest record set last year.

Xu said at the Hexun Spring Stock Market Investment Strategies Forum held on March 30 that the index may slide below 2,132 in the second quarter.

Zhou Jianming from Golden Sun Securities also said at the forum that he was more pessimistic towards the A-share market this year than last year, considering that the expected loosening of real estate industry regulations did not come and China's macro-economy slowdown may be worse than anticipated.

Wen Guoqing, chief economist with Lianxun Securities, said that China's current stock market is not worth investing in even if the price to earnings ratio (P/E ratio) could be 50 percent lower. The P/E ratio of the Shanghai Composite Index was 17.11 at 2:44 pm on April 5. He attributed frequent slumps to problems in the stock market's mechanism.

Li Xianduo, an associate professor at China University of Finance and Economics, said at the forum that China's stock market will not move on if there is no improvement in mechanism design.

However, Guo Shiqing, dean of Founder Finance Institute, believes there are still opportunities for investors due to expectations that the market may hit a new low and China's tightening policy may change in the middle of 2012. He said that China's stock market reached a record low in 2008 due to various problems but these issues are being corrected. He suggested investors grasp opportunities as history repeats itself.

China's stocks climbed on Monday, the first trading day after a three-day holiday, driving the benchmark to 2,302.24, up 1.74 percent. The index dropped over 3 percent in the week before the holiday.