A firm retreat with shrinking turnover --- Haitong Market Summary government, yesterday, overnight, retreat, failed

NYboy

*SHCOMP  1717.72   -42.89  (-2.44%)    Vol. 27.75bn (USD4.07bn)
*SZCOMP  5720.55   -145.23 (-2.48%)    Vol. 10.76bn (USD1.58bn)
 
*A-shares market followed U.S. overnight correction, retreating firmly from yesterday's rally with significantly shrunk turnover. Rumored government's buffer fund and strong VAT reform expectation failed to help confidence recover. Banks, Insurers and Petro giants rectified most of the gains got yesterday. Property continued the weakness. Agriculture and Transportation performed as the top losers. Contractors and Building Materials continued their strength thanks to the expected RMB5 trillion investment plan in transportation. Environmental protection related names caught investors' eyes in the last trading hour as some institutions speculating on more environmental protection policies after Obama won the election.
 
*Decliners outnumbered advancers by appx. 4:1.
*Large sacle enterprise groups will no longer be able to pay their income taxes on a consolidated basis starting Jan1, 09, according to SAT. The policy will metigate govn't fiscal pressure after the expected VAT reform next year, but indicates worse earnings for some listed SOEs.
*Contractors and Cement outperformed for the second consecutive sessions boosted by the RMB5 trillion additional investment plan in transportation construction. Post-shake rebuilding related names moved especially strong. Anhui Conch Cement (600585, +0.65%) did not perform well pressued by H-share weakness. CRBC Int'l (600263, +9.35%), China Railway Erju (600528, +2.56%), Hebei Tanhang Cement (600553, +10%), SIchuan Golden Summit (600678, +9.34%).
*Media say the government is investigating steel companies in North-East area recently. It is said that government is considering postponing the exemption plan of export tax rebate and increasing the rebate of high-end steel products. Guangzhou Iron & Steel (600894, +10.18%), Xinjiang Ba Yi Iron & Steel (600581, +5.07%), Baosteel (600019, +2.23%).
*Petro China (601857, -2.82%) and Sinopec (600028, -3.42%) allowed some of their retail networks in Hubei and Shandong province to cut oil sale price.
*Banks and insurers erased most of the gains. Ping An (601318, -5.10%), CMB (600036, -5.04%).
*China Railway Construction (601186, +0.50%) declared that the halt of the Nigeria railway project will not impact its FY08 earings performance. Haitong analyst thinks the project is still very likely to resume after halting 90 days and maintains his previous earnings forecasts (FY08-RMB0.33, FY09-0.46, FY10-0.67).