BIZCHINA / Index & Statistics |
Market tumbles in 'over-due' correction, 01/31(China Daily)Updated: 2007-02-01 10:41 After months of hectic trading and dizzying price surges, the Chinese stock market yesterday received a jolt from profit-taking by institutional investors, which sent the key indicator down 4.9 percent the biggest one-day drop in eight months. The Shanghai Composite Index, the most widely-watched indicator of the mainland stock market, fell 144 points to close at 2,786. The smaller Shenzhen Composite Index slid 5.8 percent to 655.53. Stocks in the financial sector took the biggest hit. China Minsheng Bank tumbled 9 percent to 12.02 yuan ($1.54). China Life, which had risen 8 percent since its debut on the Shanghai Stock Exchange on January 9, fell 4.4 percent to 38.21 yuan ($4.87). Real estate companies also felt the force of the correction, nearly all of them falling. Vanke A, for instance, dived 9.41 percent and Beijing North Star, 7 percent. Analysts said the "over-due" correction was triggered by a string of cautionary remarks by investment experts and government officials on potential market risks. The Shanghai stock index, for example, had risen 134 percent since the beginning of 2006. "More and more institutional investors think that the prices of many big-cap stocks have gone too high," said Zhang Yidong, an analyst at Industrial Securities. "They were the big sellers in the market." But Zhang predicted that the correction would be short-term because of strong fundamentals such as strong economic growth and healthy corporate earnings potential. "It is nothing more than a short-term adjustment in a strong rally," he said. Chen Wenzhao, with Changjiang Securities, said a short-term correction should lead to a healthier market. He predicted that the market would soon pick up backed by strong corporate performance. The tremor of the mainland market also spread to Hong Kong where many mainland companies are listed. The benchmark Hang Seng Index yesterday plunged 354 points or 1.73 percent, closing at 20,106 points. (For more biz stories, please visit Industry Updates)
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