Shanghai: A mixed trading year in Asia has ended with the Chinese stock market posting an annual decline of nearly 15 per cent.

Despite a slight rally yesterday, the Shanghai Composite closed at 2,808.1, 14.3 per cent lower than a year ago. This cemented its position as one of the worst-performing stock markets around the world.

Investors across Asia are looking back at 12 months in which their largest stock markets failed to taste the strong growth seen on many Western exchanges.

On Thursday, the Japanese Nikkei posted a 3 per cent decline for 2010. The strong yen has hurt Japan's manufacturing industry this year, eating into profits and making exports less competitive.

The picture was brighter in Asia's smaller markets, though. Hong Kong's Hang Seng recorded a 5.3 per cent annual gain yesterday while the South Korean Kospi index surged by 22 per cent during 2010.

The Chinese economy grew by about 10 per cent last year. But rather than match this performance, its equities market has been haunted by fears of hefty interest rate rises and new curbs on borrowing.

Prudent policy

Last month, China announced it is moving to a "prudent" monetary policy to tackle inflation, and on Christmas Day it raised the cost of borrowing.

However, some analysts believe that Chinese shares have fallen too far. Zhang Fan, strategist at Tebon Securities in Shanghai, told Reuters there are signs of rising optimism, with the Shanghai Composite rising 1.8 per cent in yesterday's trading session: "Stocks are likely to rise (this) year as tightening fears have been priced in, while faster yuan appreciation could introduce more liquidity into the market," Zhang said.

2010 was certainly a strong year for commodities. Oil was on track for a 12 per cent annual rise, having averaged about $80 (Dh294) per barrel. This is its second highest yearly average ever, beaten only by 2008's average of $99.75.