Markets retreat after rally, building stocks advance

Stock markets in Shanghai and Shenzhen finished south of even Thursday, surrendering some of the ground they had picked up during the previous day's rally.

The Shanghai Composite Index declined 2.67 points, or 0.13 percent, to close at 2,029.24; while the Shenzhen Component Index shed 0.25 percent, or 20.19 points, to finish at 8,071.49.

Both indices traded within a tight range throughout the morning and afternoon sessions, although drops in the heavily weighted coal, non-ferrous metal, tourism and auto sectors ultimately prevented the markets from rising further after Wednesday's surge.

On the positive side, building materials and real estate stocks held on to the momentum they had picked up during the previous day after the government pledged to maintain policies aimed at spurring urban construction.

Among the property developers which advanced Thursday, Vanfund Real Estate Co surged by the daily limit to close at 7.91 yuan ($1.27). Guangzhou Pearl River Industrial Development Co jumped 7.35 percent to 10.52 yuan. China Vanke tacked on 1.42 percent to 9.27 yuan.

After stumbling in early trading, most brewers found space to go higher later in the day.

Shanghai Jinfeng Wine Co Ltd climbed by the daily limit to close at 8.58 yuan. Sichuan Swellfun Co edged up 2.19 percent to 17.26 yuan. Even scandal-plagued Jiugui Liquor Co was able to add on 1.43 percent to 31.19 yuan.

On the downside, coal shares fell broadly on the day. Qinghai Sunshiny Mining Co dived by the daily limit to finish at 4.67 yuan. Shanxi Coal International Energy Group Co slumped 2.73 percent to 14.97 yuan.

Although market confidence is still relatively high thanks to statements from the government reiterating the need to maintain stable economic and urbanization policies, investors should continue to minimize their downside exposure until more implementation details emerge, say analysts.