Shanghai Market May Not Hold Gains

The China stock market on Monday saw an end to the three-day losing streak that had cost it nearly 30 points or 0.75 percent in the process. The Shanghai Composite Index broke through resistance at 2,150 points, although analysts predict that the market could hand that level right back at the opening of trade on Tuesday.

The global forecast for the Asian markets is flat to mildly pessimistic, thanks to conflicting corporate and economic news - with predicted weakness among the technology issues expected to nudge some of the heavier exporters into negative territory.

The SCI finished sharply higher on Monday, boosted by gains among the financial stocks and the properties after the market opened with significant losses.

For the day, the index gained 24.44 points or 1.15 percent to close at 2,153.29 after trading between 2,108.61 and 2,158.90. The Shenzhen Index was up 146.95 points or 1.87 percent to close at 8,022.69 for a combined turnover of 93 billion yuan.
 
Among the gainers, Industrial Bank was up 6.98 percent, while Pudong Development Bank rose 4.45 percent, China Communications Bank added 3.07 percent, Industrial & Commercial Bank of China gained 0.3 percent, Bank of China was 0.6 percent higher, China Vanke was up 2.3 percent, Poly Real Estate Group rose 3.7 percent, Aluminum Corp of China (Chalco) gained 3 percent and Jiangxi Copper was up 3 percent.

The lead from Wall Street is modestly negative as stocks finally ended their recent winning streak on Monday, with weakness in the tech sector thwarting hopes of a fifth consecutive day of gains.

With traders reacting positively to comments from Federal Reserve Chairman Ben Bernanke, stocks were mostly higher through much of the session but pulled back sharply going into the close. Bernanke gave a rare TV interview on 60 Minutes, reiterating that he sees the U.S. coming out of recession by early 2010.

Earlier, a Wall Street Journal report said that the U.S. is looking to toughen financial market oversight by giving the Federal Reserve new powers that include heightened capital requirements for banks and the authority to take over a large financial firm that is failing. On top of these changes, news that AIG (AIG) will give its executives $165 million in bonuses despite being bailed out twice by the U.S. government has angered lawmakers, and President Obama pledged Monday to use the power of the Treasury Department to try and block the bonuses.

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