GUANGZHOU (Fund China) - Though experienced a continual sell-off, China stock market finally rebounded heavily pushed by the strong warming in the surrounding countries’ markets. Shanghai composite index then re-stand at the 4700 threshold. However, even a drastic rebound occurred in the Large Cap yesterday, shanghai composite index’s 3.14% gaining can not redeem even haft of its lost a previous day ago in the market performance. The rebound is obvious with a technical feature, but the shrinking turnover makes a short of power for its further growth. Particularly, the heavy weight shares’ overall performance, catching investors’ eyeballs, constrains the Big Cap’s uptrend. Such as the typical shares: PetroChina, ICBC, and China PingAn insurance. Actually, this round’s dramatic adjustment has some, say, relationship with the heavy weighted shares’ continuous weakness. It is obviously that the final stabilization in the stock market needs a effective steadiness of heavy weighted shares. If the movement in that board is still unstable, then it would be earlier to hope for a new aggressive uptrend in the stock market.

From the after market performance in the surrounding countries which triggering a sharp turbulence in A share. The American people and corporation’s credit status deteriorated further along with a slide in America economy and a increase in the unemployment, additionally, the real estate continued to decline and the inflation moved up continuously. The investors showed a un-belief in the 150 billion dollars’ financial stimulus package embraced by the U.S. government. And the urgent 75 basic points cut itself indicated that the situation is really serious when suffering a focused burst in the sub-prime crisis and a big hit on the financial confidence. Once the sub-prime crisis spread out and became a comprehensive credit crisis, the United States economy would be badly blown to a recession. In the global view point, the U.S. economic recession would reach out its influence to China domestic economy. China Securities market also can not get out of it. Therefore, A share market is possible to be draw back ever and agah in the future though it had experienced a technical rebound.

Though the stock market rebounded as expected, investors’ prudence is unabated as they have suffered a big downtrend previous days ago. Yet the shrinking trading amount also brings forward a debate for the rebound will go on or not among investors. Meanwhile, the individual shares will go on its structural differentiation performance after the sell-off rebound. So in such a backdrop, adopting a defensive strategy would be treated as a wise investment approach relatively and the share holding position and portfolio is still the main factor for consideration. As the 2007 annual report disclosure has released, it is reminded that the quality growth stocks with outstanding performance, large proportion dividends and are expected to rise will obtain the stock market’s acceptance based on the annual report disclosure. And for those theme varieties, it will be good to grasp the investment rhythm.

Copyright Fund China 2008.

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