Shanghai stocks were mixed yesterday as turnover remained thin and banking shares slid on concern about increasing equity supply, rising inflation and monetary tightening.

The benchmark Shanghai Composite Index fell 0.90 percent to close at 4417.849 points, after hitting a fresh five-month low of 4330.697.

Many investors remain shell-shocked by the index's 7.19 percent plunge on Monday, and disappointed by its failure to stage a significant rebound on Tuesday despite stronger foreign stock markets.

Turnover was modest yesterday at 92.2 billion yuan, though up from Tuesday 79.2 billion yuan.

"Investor confidence is very fragile, and many people want to hold cash rather than stocks through the week-long lunar new year holiday next week," said Li Xianming, strategist at Ping An Securities.

Industrial Bank plunged 8 percent to 41.49 yuan after saying 3.28 billion shares held by institutions and strategic investors would become tradable next Tuesday with the expiry of a one-year lock-in period related to its Shanghai IPO.

"Banking stocks are weighed down by the fact that quite a few institutional investors are likely to cash in this year when lock-in periods expire," said Qiu Zhicheng, analyst at Haitong Securities.

Underlining concern about the government's pressure on banks to cut back their new lending, bankers who were briefed on the situation said Beijing had set CITIC Bank's 2008 new loan quota at 95 billion yuan, below its actual lending of nearly 100 billion yuan last year.

CITIC Bank shares fell 0.90 percent to 8.82 yuan.

Hong Kong falls

Hong Kong stocks tumbled yesterday, surrendering earlier gains as investors booked profits before a widely expected rate cut by the Federal Reserve.

Weak mainland stock markets were also a drag on the market.

The benchmark Hang Seng Index settled near the bottom of the day's range, closing down 2.6 percent, or 638.11 points, at 23653.69. The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, fell 4.7 percent, or 623.77 points, to 12755.41.

China Life, the day's top traded stock and blue chip loser, tumbled 7.4 percent to HK$29. Ping An slumped 6.5 percent to HK$57.4 amid uncertainties surrounding its roughly $20 billion capital-raising plan.

Agencies

(China Daily 01/31/2008 page15)