The Chinese stock market showed signs of adjustment on August 28, following four consecutive days of gains. Analysts attribute the decline to profit-taking activities. The Shanghai Composite Index closed down 0.11% at 3,952.18, the Shenzhen Component Index fell 0.68% to 13,953.07, and the ChiNext Index dropped 1.41% to 3,424.40.
This week, the Chinese stock market had seen three days of continuous increases. Over the past month, the Shanghai Composite Index has risen by 3.4%. Factors contributing to this month’s bullish trend include expectations of stimulus policies, improved liquidity, and optimism surrounding technology stocks. However, some analysts in the Chinese securities market caution that the recovery in risk appetite due to macro and micro liquidity improvements may be nearing its end.
Despite the slight decline, some analysts suggest that the overall market trend has not reversed but rather that the pace of increases is slowing as the market undergoes adjustments.
In a report, Guangda Securities noted, "The balance of stock-backed loans is decreasing, and market trading turnover is declining, indicating a cooling off. Additionally, external risks have emerged, shaking global asset markets." They added that the indices are fluctuating within a range, with sectors such as electronics, telecommunications, and defense expected to perform well.
On this day, shares related to power grid equipment experienced weakness for the second consecutive day. Stocks like Suyuan Electric and Mingyang Electric saw significant declines. On August 26, U.S. President Donald Trump signed an executive order declaring a national emergency, stating that foreign equipment used in power systems could pose security threats. This has led to expectations of sanctions against Chinese power grid equipment, contributing to the sector's downturn.
In contrast, the grain sector showed strength, with companies like Dunhuang Zhongye and Xin Sai Gu Fen hitting their daily price limits. Chicago wheat futures have been on the rise, reaching their highest levels in three years. HSBC analyzed that factors such as conflicts in the Middle East, extreme heat in the Northern Hemisphere, and the El Niño phenomenon are negatively impacting grain cultivation, leading to supply shortages across agricultural supply chains.
Meanwhile, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7811 yuan, a decrease of 0.0029 yuan from the previous day, reflecting a 0.04% increase in the value of the yuan.
* This article has been translated by AI.
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