BEIJING, Feb. 1 (Xinhua) -- Apart from the reunion of families and friends, Chinese investors had one more to be grateful for during the Chinese Lunar New Year holiday - the stock market, China Daily reported in its weekend issue.
The leading indicator, the benchmark Shanghai Composite Index, saw gains of 9.3 percent through the first month of 2009.
"The out performance of A shares coming into 2009 is largely attributed to proactive government policies to stabilize the economy and fairly relaxed liquidity in the market," Wu Feng, an analyst with TX Investment Consulting, was quoted as saying.
Indeed, on the domestic front, persistent policy efforts from the fiscal stimulus package to specific measures to boost the automotive and steel sectors have boosted market enthusiasm.
In addition, the recovery of the broad and narrow measures of money supply through December also implied an increase in liquidity arising from a more relaxed monetary policy.
However, worsening corporate earnings and faltering domestic economy will continue to put pressure on the country's stock market, despite the generally upbeat long-term prospects for A shares.
As of Jan. 20, among the more than 670 listed companies that had posted their preliminary earnings reports, 60 percent were projecting profit declines or losses in 2008, distinctly higher than the figure of 20.67 percent in 2007.
"We forecast that the growth rate of corporate earnings will slide to minus 10 percent in 2009, from positive growth of 3 percent in 2008," Wu said.
Yan Ji, an investment director with the HSBC Fund Management Co. Ltd., also expressed concerns regarding company performance, saying earnings among industrial companies will continue to slide in 2009.
"The rebound may come when companies' de-stocking process ends and the highly effective fiscal easing passes on to the real economy in the second half," he said.
