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Low investor confidence leads to stock decline ( 2003-11-07 08:58) (China Daily)
China's shares ended lower yesterday as investors cashed out of large-cap stocks after recent gains and persisted in dumping poor earners, brokers said. The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, fell 2.04 per cent to 1,356.790 points. The Shenzhen index shed 15.95 points, or 0.49 per cent, to end at 3271.65 yesterday. Sinopec Corp, the market's largest company by capitalization, edged down 1.26 per cent to 3.91 yuan (47.3 US cents), making it one of the day's most active counters. Its stock has jumped 5.1 per cent since the start of the week after posting robust growth in third-quarter net profits, outperforming the broader market's 0.6 per cent gain. "The market tumbled amid profit-taking in blue chips, which had led a recent rally," said analyst Zhao Jun of Guotai Jun'an Securities. Baoshan Iron and Steel Co Ltd, the world's fourth richest steel maker, was flat at 6.60 yuan (79.8 US cents) after a 12.2 per cent surge this week. More than 20 companies slumped their 10 per cent daily limit yesterday, hit by a selling spree in poor earners. Shares of Xinjiang Hops Co Ltd fell their 10 per cent limit for the fourth straight session to 10.93 yuan (US$1.30) after the company said on Tuesday its chairman had gone missing, leaving behind a trail of debt. "Investor confidence remains poor with few wishing to buy, while a shortfall of funds is weighing on the market," said senior analyst Gui Haoming at Shenyin & Wanguo Securities. The liquidity could get even tighter as institutions ready cash before end-of-year book settlements, he said. Despite rallies on other Asian markets, the Shanghai index has shed 16.8 per cent since mid-April, hit by factors including a tightening of bank loans and an overloaded IPO pipeline. Retail investors had asked for nearly 70 times the number of shares offered in Yangtze Electric Power Co Ltd's IPO, the fourth largest initial public offering ever in the mainland bourses, drawing in plenty of funds from the market, brokers said. Analysts predicted the Shanghai index would stay range bound in the near term, with resistance seen at 1,400 points and support pegged at the year's low of 1,311.684 points. Shanghai copper futures came under pressure yesterday as investors sold heavily after the previous day's rousing gains, amid uncertainty as to where the see-saw market was headed next, traders said. Shanghai's most active May contract fell 210 yuan (US$25.40) to 22,080 yuan (US$2,693), while most other contracts fell between 90-350 yuan (US$10.90-42.30). Volume rose to 217,404 from 169,840 lots on Wednesday. The domestic market had been racking up strong gains over the past week or so, prompting investors to cash out of large rallies, traders said. "This roller coaster market is a reflection of differing opinions as to where the market is going," one trader said. "We expect the situation to stabilize soon, after which the market will probably rise on a steadier basis." LME three-month copper was quoted at US$2,090/US$2,095 a ton, midway through yesterday's Asian trade, having closed up US$8 on Wednesday at US$2,103. China's yuan ended two notches weaker versus the US dollar at 8.2769 on yesterday, but remained near the stronger end of its managed trading range.
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