The benchmark Shanghai composite index is likely to top 2,500 and test the 2,600-point level during the year, said Xiao Zhuoji, a renowned economist and professor of Beijing University.

Xiao was attending the Fifth China Capital Market Forum held on Saturday in Beijing, which attracted renowned scholars and government officials.

The prediction was based on the fact that more bank deposits were flowing into the bourses and the performance of listed firms had improved, Xiao said.

Institutional investors, often deemed as the stabilizer of the stock market, will also experience vast growth in the new year.

The health of the stock market is a barometer for the national economy, analysts said.

Qiu Xiaohua, deputy director of the National Bureau of Statistics, expected China's economy to grow by 7-8 percent this year.

Speaking in the same forum with Xiao, Qiu said public investment would pick up this year in spite of uncertainties in the international market.

China's stock market outperformed other markets in the world last year. Shanghai's composite index rose more than 50 percent in the year and Shanghai B shares surged over 130 percent.

Most experts agreed the bullish trend would continue this year, although there are some uncertainties.

A slowing world economy may affect Chinese exports and foreign investment in China.

Worries over the impact of fund diversion from the main board to the planned NASDAQ-style second board also prevail.

But Xiao said the second board should be launched as soon as possible because the problems would be better solved if they came earlier.

Increased supervision from securities regulators would also help curb speculation and the disclosure of incorrect information, said Xiao.

Insiders have said the authorities will postpone the second board debut until May this year due to the recent fall of NASDAQ and concerns about profit-taking pressures and high risks on the new market.

Economist Fan Gang believed the launch should not be delayed.

"Many fund-thirsty high-tech companies and private firms are pinning their hopes on the new market, which is expected to offer a new funding channel that has been often blocked in the past," he said. But investors should not regard the second board as a place to rack up short-term profits, said Fan.

Changes in the international capital market also provide a golden opportunity for both the main board and second board in China, said Yi Gang with the People's Bank of China.

The slowdown of the US economy has seen more funds flowing into Asian countries.

Predictions from several famous investment banks, including Goldman Sach and Merill Lynch, all rate China as a promising market and safe harbour this year.

"After China joins the WTO, financial and service sectors will be further open to foreign investors," said Yi.

(China Daily 01/08/01)