Markets
Equities fall to their lowest in eight months in Shanghai - Friday
By ZHANG SHIDONG (China Daily)
Updated: 2010-05-08 09:43
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SHANGHAI - China's stocks fell, sending the benchmark Shanghai Composite Index to an eight-month low, as concern Europe's debt crisis will halt the global recovery spurred the biggest drop in US equities in a year.
Air China Ltd, the nation's largest international carrier, and Jiangxi Copper Co, the biggest producer of the metal, paced declines for airlines and commodity companies as a slowdown may cut demand for flights and raw materials. China COSCO Holdings Co, the world's largest operator of dry-bulk ships, slid 5 percent.
"There could be an economic ripple effect globally if this is not quickly contained," said Howard Wang, Hong Kong-based head of the China team at JF Asset Management, which oversees about $50 billion. "And as we saw two years ago, there's a danger in underestimating these ripple effects."
The Shanghai Composite Index, which tracks the bigger of China's exchanges, dropped 51.32, or 1.9 percent, to 2,688.38, the lowest close since Sept 1 and capping a 6.4 percent decline for the week.
The CSI 300 Index fell 2.1 percent to 2,836.79. May futures on the CSI 300, the most active contract, lost 2.6 percent to 2,896.
US stocks tumbled as waves of computerized trading exacerbated a selloff triggered by Europe's debt crisis, sparking a slide in Asian shares. The rout briefly erased more than $1 trillion in US market value as the Dow Jones Industrial Average fell almost 1,000 points, a 9.2 percent plunge that was its biggest intraday percentage loss since 1987 and largest point drop ever, before paring the decline.
'Double slowdown'
The Shanghai index may fall to 2,500 as property curbs and the European debt crisis hurt exports and investment, according to KBC-Goldstate Fund Management Co.
"Fixed-asset investment and exports may face a double slowdown because of the property crackdown and the debt crisis in the eurozone," Larry Wan, Shanghai-based deputy chief investment officer at KBC-Goldstate, a joint venture with Belgium's biggest money manager, said on Friday.
The Shanghai gauge has dropped this week after the central bank ordered a larger proportion of deposits as reserves at commercial lenders for a third time in 2010. It has slumped 18 percent this year, Asia's worst performer, as the government unwound monetary stimulus and stepped up measures to cool inflation and prevent a housing bubble inflated by record lending last year.
Air China slid 4.7 percent to 12.29 yuan ($1.80). China Southern Airlines Co, the nation's biggest carrier by fleet size, dropped 5.6 percent to 7.77 yuan. China Eastern Airlines Corp, the second largest, lost 5 percent to 7.95 yuan.
China COSCO
China COSCO lost 5 percent to 11.10 yuan. China Shipping Development Co, a unit of China's second-biggest sea-cargo group, retreated 4.4 percent to 9.85 yuan.
Crude oil for June delivery fell 3.6 percent to $77.11 a barrel in New York on Thursday. Copper futures fell 1.1 percent in New York.
Jiangxi Copper lost 3.7 percent to 29.56 yuan. Aluminum Corp of China Ltd., the nation's biggest maker of the lightweight metal and also called Chalco, fell 3.1 percent to 10.19 yuan. PetroChina Co, the nation's biggest oil company, dropped 2.4 percent to 11.04 yuan.
Bloomberg News
