Tiny gains disappoint mainland investors
Shanghai stocks record small gain on first day of trading in new year, crushing shareholders' hopes and bucking the trend of global bourses
Mainland stocks yesterday failed to chalk up handsome gains on their first trading day of 2013, dampening investors' hopes that shares would follow a rally on overseas bourses which occurred during the three-day break on the local market.
The Shanghai Composite Index inched up 7.86 points, or 0.35 per cent, to 2,276.99 following a 1.6 per cent rise on Monday, the last trading day of 2012.
In contrast, Japan's Nikkei-225 Index yesterday climbed 2.8 per cent for its first trading day of the year, the biggest opening day rise since 2002, buoyed by US lawmakers' decision to put off spending cuts and tax increases.
The weekly gain of nearly 2 per cent on the A-share market also lagged behind the Hang Seng Index which advanced 2.9 per cent this week, the biggest weekly performance in the past six weeks.
"It was a bit disappointing because retail investors were expecting a strong rally on the first trading day of the year, particularly after seeing a bullish run abroad in the previous two days," said West China Securities trader Wei Wei. "It remains too early to become upbeat on this year's outlook."
Mainland stocks normally rally after a long trading suspension, especially if overseas markets post strong rallies during the trading break, a response that analysts and investors describe as "playing catch up".
January 4 is also viewed by the Chinese as an auspicious day because it is pronounced as "yao fa" in Putonghua, which means it is a day to make a fortune.
Investors took it for granted that A shares would turn bullish amid signs of economic recovery.
The strong showing in Hong Kong and other overseas markets cemented investors' belief that 2013 would be a prosperous year.
"Institutional investors have yet to be convinced of an economic recovery," said a fund manager who asked not to be identified. "A flood of new share offerings in future also weighed on the fund managers."
The regulator has suspended initial public offerings since October to avoid a liquidity drain, but more than 800 firms have still lined up to list on the Shanghai and Shenzhen stock exchanges.
When the new state leaders come to power after the National People's Congress in March, they are likely to introduce a series of economic sweeteners, heightening hopes for powerful gains from equity investments.
Mainland investors are pinning hopes on the Communist Party's newly elected general secretary Xi Jinping and Li Keqiang, who is set to become premier, hoping they will implement business-friendly policies to bolster corporate earnings growth.
Most mainland investors have paper losses following two years of sharp falls on the A-share market between 2010 and 2011.