China shares end higher

China's key stock index closed a marginal 0.08 per cent higher on Friday.

China’s key stock index closed a marginal 0.08 per cent higher on Friday,snapping a six-day losing streak but logging a 7.7 per cent loss for April as surprisingly strong government steps to cool the runaway property market took a heavy toll on shares in the sector.

The market is also under pressure from expectations that the government will exit its loose monetary policy,in place since late 2008 to cushion the impact of the global financial crisis,with many investors expecting the People’s Bank of China to kick off a cycle of interest rate hikes as early as this quarter.

The Shanghai Composite Index finished the day at 2,870.6 points,after spending most of the session in negative territory and slipping to its lowest intraday level in seven months.

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Adding to a series of official steps and comments aimed at clamping down on property prices,Jia Kang,a senior researcher with the Ministry of Finance,said in remarks published on Friday that it would be feasible for China to launch a property tax in the near term because economic growth was sufficiently strong.

Analysts said the market should have the potential to fall further after the May Day holiday,which will extend from Saturday until Monday,with any technical rebound expected to be minor.

“Investors will particularly be watching macroeconomic data to be announced in mid-May,” said analyst Zhang Gang at Central Securities in Shanghai.

“If the data contains some surprises pointing to strengthening expectations of monetary tightening,market sentiment will be hit further.”

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The 14-day Relative Strength Index for the benchmark index has fallen below the 30 mark,which typically indicates a market is oversold.

However,the index easily broke through two major support barriers at the 125-day and 250-day moving averages last week,followed this week by a slump to successive lows for the year,severely denting investor sentiment which will not be easily repaired anytime soon,analysts said.