The Shanghai stock market may remain flat due to low investor sentiment over uncertainties in global markets as well as fears of higher inflation, according to observers.
The key Shanghai Composite Index dropped for the fourth day last Friday and ended the week at 2,534.36 points. The index has lost 2.3 percent in the past week.
"China will continue to pursue a prudent monetary policy in order to maintain stable economic growth for the rest of the year," Zeng Xianzhao, an analyst with Everbright Securities, wrote.
"Uncertainties in the European and US monetary policy deter investors from entering the market over the short term," he noted.
Last week, the State Information Center estimated that inflation could accelerate to 6.2 percent in the third quarter from 5.7 percent in the earlier three months as food price pressure persists.
The index may stay between 2,500 and 2,600 points this week, said Qian Qimin, Shenyin & Wanguo Securities' deputy research head.
"Pressure from domestic inflation isn't likely to ease in the near future, and fluctuations in overseas markets will also prevent domestic stocks from climbing," Qian said.
