Qian Shuo
The market continued to build the bottom and attempted to rose back at the end of last week. The most remarkable gains was on Friday. However, the indexes still closed with weekly loss because of the decline in the previous trading days.
The main benchmarks all ended significantly lower. The Shanghai Composite Index was down 100.12 points, or 3.52%, to end at 2747.23. The Shenzhen Composite Index dropped 468.13 points, or 4.99%, to close at 8911.34. The Growth Enterprise Index fell 65.40 points to 1541.31, leaving it with a 4.07% weekly loss. The Small and Medium-Sized Index lost 315.47 points, or 4.87%, to finish at 6162.29.
The index has been adjusting for more than three months since mid-March, and the index once fell below 2700 points. Comparing to the previous 2638 points, the current evaluation is more reasonable. The short-term downward trend was mainly caused by the pessimism in the market. There is only limited space for the market to continue to fall further. The indexes have been falling for seven weeks. The last seven weeks of decline was in November, 2011, which only appeared once in the past ten years. After that the market bounced back in the next seven weeks. Therefore, all the signs have shown that after the shrink of evaluation, the market has shown characteristics of bottom-building process.
During last week, as the market continued previous bottom-building trend, the heavily-weighted stocks' performance also differentiated. Only few concepts were active, and some overfalling stocks were more stable. Concepts like information security, chips, and smart apparels maintained the weak rebound for a week, and the bottom for insurance, IT equipment, and semiconductor sectors started stabilizing. At the same time, electrical instrument place, daily chemical, and tourism sectors had shown strong trend of further adjustment and bottom-exploring. Last week's market was mainly characterized by the frequently adjusted hot-spot stocks and the slowing down of indexes' decline.
It's impossible to repair the market overnight, and the market is more likely to continue acting at the adjusting and bottom-building stage. However, as the A-share market became more attractive to capitals form oversea, China's macroeconomy is still resilient, the evaluation of the A-share market is at the bottom range, and many listed companies have shown favorable results in their mid-year reports, the market still has great long-term investment value to expect.
