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China's shares end year on down note, but nearly double over 2007

China's shares end year on down note, but nearly double over 2007

China's stock market chalked up a stellar _ and turbulent _ year Friday, with its benchmark Shanghai Composite index having soared nearly 97 percent, making it the world's best-performing major stock index in 2007.
But worries that authorities will raise interest rates or take other steps to cool the country's blazing growth caused the market to drop slightly in Friday's trading, with the Shanghai index falling 0.9 percent to 5,261.56 points.
The Shenzhen Composite Index for China's second, smaller market dipped 0.4 percent to 1,447.02.
News of the assassination of Pakistani opposition leader Benazir Bhutto _ which heightened concerns about instability in Pakistan and the surrounding region _ also gave investors an excuse to take profits, traders said.
Looking ahead, concerns about tightening measures will likely restrain the market's gains next year, analysts said.
"We expect the stock market will go up in 2008, but the magnitude of the growth will be less than that of 2006 and 2007," said Gui Haoming, chief strategist of Shenyin & Wanguo Securities. "The economy will keep growing but there is uncertainty" about the "government's macro-economic control."
It has been a volatile year for China's stock market with several sudden drops, including a nearly 9 percent plunge in the Shanghai index in late February that sparked a brief sell-off in global markets.
While the Shanghai index surged 96.7 percent over 2007, it has also fallen about 14 percent since hitting a record high of 6,124.04 points in mid-October.
On Friday, financial firms fell on concern that Beijing might announce new monetary tightening measures over the long holiday weekend. Markets were due to reopen Wednesday after New Year's.
The government is trying to keep the fast-growing economy, which is expected to expand by more than 11 percent this year, from igniting inflation or a debt crisis and has raised interest rates repeatedly and tightened access to credit.
Shenzhen Development Bank dropped 1 percent after rising 10 percent during the past two weeks. Ping An Insurance fell 2 percent after gaining 7 percent over the same period.
Also pulling the market lower was heavyweight PetroChina, which fell 1.4 percent. Investors have been concerned that shares in the oil giant are overvalued. Analysts say the company's market capitalization is so huge that a 1 percentage point drop in PetroChina pulls down the main Shanghai index by 20 points.
"PetroChina is still far too expensive," said Guosen Securities analyst Wang Junqing. "At this price, the firm's net profit growth has to be 20 percent, but PetroChina's profit forecast is 10 percent."
Gold miners bucked the downward trend after news of Bhutto's assassination prompted some investors to shift out of the U.S. dollar and take refuge in gold. Zhongjin Gold rose 7.7 percent and Shandong Gold-Mining gained 5.6 percent.


Updated : 2020-12-02 08:58 GMT+08:00