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BIZCHINA / News |
Index dives after hitting record highBy Ding Qi (chinadaily.com.cn)
Updated: 2007-10-10 16:58 Domestic stock markets went through dramatic swings Wednesday, as major index in Shanghai dove by a maximum 130 points during the last trading hour after it hit another record of 5,860.86 points. The benchmark Shanghai Composite Index opened at 5,742.65, jumping 27 points from yesterday's close. Propelled by large-capped stocks in the steel and energy sectors, it surpassed 5,800 to 5860.86 points in the afternoon. A sudden 2 p.m. plunge led by blue chips triggered panic selling and the index fell over two percent within 50 minutes to the day's lowest of 5,727 points. Although it rebounded in the last quarter, the market still lost most gains and closed at 5,771.46 points. Although touching the 19,600-point record in the day, the Shenzhen bourse also experienced a roller coaster day. The Shenzhen Component Index closed in a minor deficit of 0.28 percent. Losers far outnumbered winners today with 933 stocks down, 148 flat and only 411 up. Turnover of the two markets reached a combined 245.7 billion yuan (US$32.67 billion), a bit higher than that of the previous day. The last-hour plunge contributed significantly to trading. Although affected by the dive, finance, energy, and steel-making sectors were still well performed today. Industrial and Commercial Bank of China rose by 0.3 yuan and closed at a new high of 7.59 yuan. Jinan Iron & Steel surged 8.43 percent to 25.59 yuan. Nonferrous metals regained strength after weeks of correction. Aluminum Corporation of China Limited, the nation's leading aluminum producer, led the sector with a limit up of 53.02 yuan. China Shenhua Energy surprised most investors again with a ten percent gain after it surged over 83 percent on its debut yesterday. According to market watchers, the return of the coal tycoon, along with other red chips, was aimed to pacify the extra high valuation of the current A-share market and avoid excessive speculation. However, its 76.23 yuan price and 80-times P/E ratio ironically made the stock more expensive than the market's average. A report released Tuesday from BOC International anticipated that as much as US$200 billion will flow out of the domestic stock market over the next year if the government approves the so-called "through-train to Hong Kong stocks" plan. This, together with the US$50 billion qualified domestic institutional investors (QDII) fund and the return of more red chips, will tie up excess liquidity from the domestic A-share market in the fourth quarter, according to the report. However, one question remains regarding the current feverish market. Will additional investment channels diversify the overwhelming investor enthusiasm? Fourth quarter market results are eagerly anticipated. |
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