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Five uncertainties make investors cautious in A-share trading

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2014-06-16 GMT+8:00

BEIJING, June 13 (Xinhua) – A total of 14.8 million A-share accounts recorded stock transactions on China's Shanghai and Shenzhen bourses in May, 3.35 million less than the figure for the previous month and only accounting for 11.21 percent of the total valid accounts, according to the latest statistics from the China Securities Depository and Clearing Co., Ltd.

This is the third straight month to see month-on-month decline in the number of accounts with A-share transactions, and the proportion of the trading accounts in the total accounts dipped to near historically low level.

Apart from the decline in active accounts, newly opened A-share accounts and the number of accounts with stock positions also fell to the bearish level.

The phenomenon indicates that the activity of the A-share accounts further decreased as investors were taking wait-and-see attitude on several uncertainties.

Firstly, the fundamental uncertainties continued to bother the investors. An analyst with Guangfa Securities (000776.SZ) thinks that the three carriages for the country's economic growth, namely investment, consumption and foreign trade, were still weak while there was no new growth point, making investors unclear about the prospect of China's economy.

Secondly, the pending restart of initial public offering (IPO) raised worry over liquidity tension.

Thirdly, investors were concerned about the possibility of return of credit risks at the end of June as it did in June 2013, which caused the A shares to plunge significantly.

Fourthly, worries over bubble burst ofChina's overheated property market also affected investors' investment strategy as the property market is still one of the main driving forces forChina's economic growth.

Finally, uncertainties in overseas markets were also factors influencing Chinese investors' decisions. For instance, the Federal Reserve's move to adjust the interest rate largely influenced the flows of overseas speculative capital and adjustment of domestic policies, which left significant impact on the domestic stock market.

In these circumstances, the domestic stock market has been fluctuating in tight ranges with neither sharp rises nor declines recently, thus, the room for investors to gain profits was very limited, said an analyst with Oriented Securities. Therefore, investors preferred to take more cautious attitude for investing in A-shares, he added. (Edited by Li Xueqing, lixueqing@xinhua.org)

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