Profit taking took the steam off mainland stocks yesterday, with the main index swinging wildly before snapping a four-day winning streak, casting doubts on the viability of the government-orchestrated rally.
The sputter followed the recent state-media hype predicting the end of the bear run after the government this week banned block trades of state-owned shares on the open market, cut the share-trading levy and floated talk of retail margin financing.
The Shanghai Composite Index slipped 25.279 points or 0.71 per cent to end at 3,557.749, after rising 2.11 per cent in afternoon trading from Thursday's close.
State-owned securities newspapers touting the stamp-duty cut helped boost investor confidence on Thursday. But by yesterday, gloom had returned as analysts warned of a heavy sell-off possibly taking place next week when investors might cash in their recent gains.
'It is common that a sharp fall follows a hefty gain,' said TX Investment Consulting analyst Qiu Yanying. 'There's no way that the market can keep climbing up.'
Citing an unidentified official, China Securities Journal reported yesterday that the China Securities Regulatory Commission would soon approve margin financing for retail investors, a move to inject more liquidity into the market.
In the past few days, the mainland media said the benchmark Shanghai index had bottomed out.
