Thursday 3rd April Market Activity

By George P

Following up on my previous post on Wen Will You Take Action (Soon!) the SSE has made a few (interesting) twists and turns. Here is a little more detail:

Date	Close	Loss/Gain
02/04/08	3347.88	+18.72
01/04/08	3329.16	-143.55
31/03/08	3472.71	-107.44
28/03/08	3580.15	+168.66

Wen made his statement on the 30th March - what is interesting is the jump in the index at close on the 28th of March, just before Wen was going to make his statement - did investors predict it? Insider information?

It appears that my conclusions were a little off, and the week has started on quite a sour note. What does this actually mean? The central Government has actually cautioned that domestic fixed-asset investments are still growing too fast and that banks are still lending too much - this was one of the reason for the sharp decline on Tuesday. In my opinion, this was a very responsible statement to make, and could cool serve as a catalyst to get stocks to acceptable values.

Also, as the previous measures that were taken to boost the stock market proved (e.g. unfreezing of stock funds), investors are seemingly not so reliant on Government intervention to influence their behaviour. In the past, statements such as the one made by Wen would have induced a buying frenzy. Now they require solid information and action, not just 'promises'.

Yesterday, stocks rebounded quite strongly at lunch time, but the gain was much less apparent at close. Stocks opened higher this morning.

-GP