China's shares slid 1.4 percent on Friday, paced by potentially poor earners, but blue chips such as top Asian refiner Sinopec Corp attracted bargain-hunting interest from investors. The Shanghai composite index closed at 1,026.115 points, just shy of its lowest in eight years.
Bearishness should persist over the coming week, as investors remain sensitive to earnings trickling out over the July-August interim reporting period, traders said.
Shares in companies that had warned of dismal first-half results crowded the losers' list on Friday.
Top domestic cellphone maker Ningbo Bird Co Ltd slumped its daily limit of 10 percent to 3.04 yuan after forecasting an interim loss, blaming intense market competition.
Household appliance and electronic components maker SVA Electron Co Ltd also tumbled its daily limit to 3.59 yuan, after warning of as much as 140 million yuan in interim losses.
"Although the average price/earnings ratio on the domestic market is now close to that of overseas markets, the number of good buys on bourses is still limited," said Hu Weitao, an analyst at Changjiang Securities.
On Friday, investors shopped for blue chips.
Sinopec climbed 0.5 percent to 3.70 yuan. Its stock now trades at a premium of 9.4 times 2004 earnings, far lower than the market average of 14.3 times, according to Reuters Research.
The index has fallen 19 percent so far this year, battered mainly by government efforts to sell more than $200 billion of state holdings in listed firms.
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