Analysts predict the Shanghai stock market will rise this week while investors' buying interest in a wider range of sectors will also be a catalyst for the index to climb.

The Shanghai Composite Index, which covers yuan-denominated A shares and hard-currency B chips, rose 1.9 percent in the first trading week of 2008 to end at 5,361.57, above the 60-day moving average of 5,347.

"The stock market started the New Year on a strong note," said Qian Qimin, a Shenyin Wanguo Securities analyst. "The 1.9-percent rise was not quite big but we saw active trading among many individual stocks such as Olympics-related, retail and beverage issues and investors had a wider choice of stocks to invest in."

Shenyin Wanguo sees a target of 5,300 to 5,500 points for the key Shanghai index this week. Southwest Securities forecasts a range from 5,300 to 5,400 while Shanghai Securities says it may move between 5,200 and 5,500. China Galaxy Securities says the index may challenge 5,600 this week.

Analysts said expectations for better corporate earnings and abundant capital available in the market could also propel the index higher.

As high as 76 percent of the 596 listed companies that have released preliminary earnings forecast said their profit for last year would rise, according to Everbright Securities. Domestically-listed companies will start to report annual results from January 15.

Analysts said the index should fluctuate around the 60-day average in coming sessions, adding that the strong turnover last week suggests the barometer could sustain another round of rises. The daily turnover on the Shanghai and Shenzhen bourses has hovered at more than 200 billion yuan (US$27.5 billion), double the figure in the last two months of last year.

Shanghai Securities analyst Yang Ming suggests that investors may favor gold, copper and oil producers.

(Shanghai Daily January 7, 2008)