SHANGHAI: Chinese share prices were 0.49% higher in morning trade Tuesday, lifted by bargain hunting despite low volumes that pointed to ongoing investor anxiety about high valuations, dealers said.
They said interest in cheap financial and steel stocks helped lift the key Shanghai index but sentiment was gloomy after heavy losses last week that continued Monday as the annual parliament meeting failed to provide fresh leads.
Trade Monday was volatile, with the market down more than 1% as Chinese Premier Wen Jiabao set a moderate 2007 growth target of 8% in his speech to the National People’s Congress.
Chinese equities have been on a remarkable bull-run since January 2006, gaining about 140%, but many analysts believe that valuations of 30 to 40 times earnings are far too high for the market to sustain further gains.
Last Tuesday, Shanghai recorded its sharpest single-day decline in 10 years amid fears the government would slap a capital gains tax on stock investments, before the key index steadied to end the week 5.5% lower.
In morning trade Tuesday, the benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, was up 13.75 points or 0.49% at 2,799.06.
The Shanghai A-share Index was up 14.46 points or 0.49% to 2,941.06 and the Shenzhen A-share Index gained 0.42 points or 0.06% at 757.81.
“The market saw a small rebound but the significantly smaller turnover indicated that most investors are still cautious after recent global market weakness,” said Shen Jun, an analyst at consulting firm Shangzhenglian.
“The market is likely to remain stable at current levels during the political meetings. After these meetings, the market might see more corrections.”