Chinese shares slump 2.4% on 1st trading day

www.chinaview.cn 2008-02-13 16:08:52 Print

BEIJING, Feb. 13 (Xinhua) --

Chinese shares fell on Wednesday, the first trading day after the Chinese Lunar New Year holiday week, affected by the weak performances of global markets and investor jitters ahead of the release of key monthly national economic figures.

The benchmark Shanghai Composite Index dropped 108.98 points, or 2.37 percent, to 4,490.72. The Shenzhen Component Index ended down 357.20 points, or 2.12 percent, to 16,502.44.

Losses led gains by 490 to 297 in Shanghai and by 399 to 209 in Shenzhen. Aggregate turnover totaled 88.3 billion yuan (12.2 U.S. billion dollars).

The Dow Jones Industrial Average fell more than 4 percent within a week before rebounding 1.09 percent on Tuesday, stimulated by an 800 billion U.S. dollar deal offered by billionaire investor Warren Buffett to three U.S. bond insurers badly hit by the mortgage and credit crisis.

Major Asian stock markets opened higher on Wednesday but closed mixed as investor uncertainty lingered over the global economy.

The Hong Kong stock market closed 1.08 percent higher, while Japan was up 0.36 percent. Shares fell 0.03 percent in Taiwan and 0.7 percent in the Republic of Korea.

Analysts believed more supply of Chinese shares also served to soak up funds and drive down stock prices. Additional shares were released on Wednesday after ending lock-up periods with a total market value of 16.07 billion yuan.

Meanwhile, investors feared more stringent macro-control measures could be taken by the Chinese government as higher inflation-indicating figures are to be released this week.

Recent snow storms may drive the country's consumer price index up to a year-on-year growth of 7.4 percent in January and 7.1 percent in the first quarter, said Chu Jianfang, a CITIC Securities analyst.

Insurers led the slump on Wednesday as investors worried about heavy losses caused by indemnities to be paid to snow-hit regions. Ping An Insurance shed 7.13 percent to 71.92 yuan, while China Life dropped 5.55 percent to 40.20 yuan.

Chinese insurers had paid out more than 1 billion yuan in claims stemming from the severe wintry weather, said the country's insurance regulator on Wednesday.

Large caps were under pressure with PetroChina, which accounts for a quarter of the Shanghai Composite Index, plunging 3.2 percent to 23.92 yuan. China Petroleum and Chemical Corp. (Sinopec) tumbled 2.33 percent to 18.03 yuan.

China Merchants Bank jumped 4.05 percent to 34.59 yuan, while the Industrial and Commercial Bank was down 2.54 percent to 6.91 yuan.

Electricity equipment suppliers rose, boosted by strong demand in reconstruction work after the storms. GD Power Development was up 5.13 percent to 18.25 yuan and Liaoning Guoneng Group surged by the daily 10 percent limit to 9.77 yuan.

Agricultural companies also benefited from the post-disaster production, with Dunhuang Seed closing 5.31 percent up and Xinnong Development 4.03 percent up.

A report issued by CITIC Securities on Wednesday predicted the government was expected to loosen reins on credit to new projects and boost investment in snow-hit regions and industries.

It forecasted the negative impact of the U.S. stock market on Chinese shares would gradually weaken in the next two quarters.

U.S. companies are expected to maintain healthy growth this year, while interest rate cuts and government stimulation plans would work on the American economy, the report said.

Stock markets around the world have lost more than five trillion U.S. dollars in market value since the beginning of 2008,according to the report. U.S. shares, accounting for 40 percent of the global stock value, have tumbled nearly 15 percent from the high last September, while Chinese shares had jumped 30 percent from last year's highest position.

Editor: Sun Yunlong

Fair Use Notice

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.