China Stocks May Retreat Again On Friday

(RTTNews) - The China stock market has finished lower now in two of three sessions following the four-day winning streak that collected more than 180 points or 9 percent. The Shanghai Composite Index fell back below the 2,000-point plateau on Thursday, and analysts are looking for the market to extend that decline in continued volatile trade on Friday.

The global forecast for the Asian markets is loaded with pessimism once again as data and events continue to point to a lengthy and deep worldwide recession. Weaker than expected unemployment data out of the United States further fueled those fears, as does the uncertainty surrounding the survival of the three largest producers in the American automobile industry. The European markets were down sharply, as was Wall Street - and the Asian markets are tipped to follow that lead.

The SCI finished sharply lower on Thursday, but recovered in the afternoon from even deeper losses in the morning session. Financials were hammered again, but the losses were offset by gains among the properties and the commodities.

For the day, the index lost 33.71 points or 1.67 percent to close at 1,983.76 after trading between 1,956.73 and 2,030.87. The Shenzhen Composite Index was 0.1 percent lower to 556.73.

Among the decliners, PetroChina fell 2.6 percent, while Baoshan Iron & Steel lost 3.4 percent and Ping An Insurance dropped 5.7 percent.

Finishing higher, Shenzhen Textile, Shanghai Lujiazui Finance and Trade Zone Development all surged by the 10 percent daily limit, while China Vanke rose 2.0 percent, Poly Real Estate Group jumped 3.7 percent, Youngor Group added 1.8 percent, Shandong Gold soared 7.6 percent and Zhongjin Gold climbed 8.1 percent.

The market inherits yet another horrific lead from Wall Street as ended Thursday's trading sharply lower following a late day sell-off after showing substantial volatility throughout the trading session. With traders reacting to disappointing economic data, the major averages all ended the session at multi-year closing lows.

Stocks showed a substantial decline in early trading following the release of a report from the Labor Department showing that first-time claims for unemployment benefits unexpectedly jumped to a sixteen-year high last week. The report showed that jobless claims for the week ended November 15th rose to 542,000 from the previous week's revised figure of 515,000. With the increase, jobless claims rose to their highest level since spiking to 564,000 in July of 1992.

Selling pressure waned not long after the open, however, and the markets moved back to the upside as traders went bargain hunting. Contributing to the recovery was a report of a compromise on a bailout of the three big U.S. automakers. But stocks turned lower after the Democratic leaders said that there would be no vote on a bailout for the automakers this week. Some reports have suggested that the bailout could be delayed until the new presidential administration takes office in January.

Stocks subsequently accelerated to the downside in the latter part of the trading day, with the major averages continually taking out their lows for the session. The major averages all closed sharply lower, with the Dow and the Nasdaq ending the day at their worst closing level since March of 2003 while the S&P 500 ended the session at its lowest closing level since April of 1997.

The Dow finished the session down 444.99 points or 5.6 percent at 7,552.29, while the Nasdaq closed down 70.30 points or 5.1 percent at 1,316.12 and the S&P 500 closed down 54.14 points or 6.7 percent at 752.44.

In economic news, the ongoing crisis in global economies is increasing risks to Chinese employment and concerns regarding social unrest are on the rise, Human Resources and Social Security Minister Yin Weimin said Thursday. Yin told reporters that unemployment had already occurred in small and medium-sized industries, when they were closed or halted operation.

Further, the minister said he expects the situation to worse in the first quarter of the coming year. However, the minister sees some light at the end of the tunnel if government measures to support domestic demand began to take effect in the second quarter.

Citing the employment figure for the first ten months of the current year, Yin said the overall situation for the whole year was still stable. Further, the minister promised necessary help for enterprises to face difficult situations.

In corporate news, China Growth Development, Inc saw third quarter net profits climb 23 percent on year, the company said on Thursday, standing at $4.42 million. Operating expenses decreased approximately 8 percent on year to $2.04 million, while net income improved approximately 45 percent year-over-year to $1.38 million. Net income for the first nine months of 2008 was $2.6 million, compared with $2.9 million for the first nine months of 2007.

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