The Shanghai Composite Index gained 0.8 percent to close at 2,728.02 last Friday. The gauge has fallen 11 percent from this year's high on concerns that China's economic growth may slow further and that the central government may unveil more tightening measures to battle inflation.
The market may hover between 2,650 and 2,850 this week when it reopens tomorrow after the Dragon Boat Festival, according to analysts at Shenyin Wanguo Securities in a report at the weekend. They added that tightening moves are likely to continue even though economic growth has already shown signs of slowing.
The brokerage suggested investors pay attention to agriculture-related shares such as Fujian Sunner Development Co, Sichuan New Hope Agribusiness Co and Shandong Minhe Animal Husbanry Co because these firms may benefit when the value of chicken meat consumption is set to double to 266 billion yuan (US$41 billion) in the next decade.
Bohai Securities shared Shenyin Wanguo's views and recommended big caps, which now mostly have low valuations, as safe investments.
Haitong Securities forecasts the market may rebound in the first half of this month and hover around 2,900 points in the second half, according to its report.
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