Iraq War Worries Wobble China's Stock Market

Home>>Business

Last updated at: (Beijing Time) Wednesday, March 26, 2003

Iraq War Worries Wobble China's Stock Market

China's shares closed down yesterday after investors, worried about renewed weakness in global equity markets, sold large capitalized companies such as China International Marine Containers (CIMC).

DISCUSSION

CHINESE

SEND TO FRIEND

China's shares closed down yesterday after investors, worried about renewed weakness in global equity markets, sold large capitalized companies such as China International Marine Containers (CIMC).

Shanghai's B-share index fell 1.42 per cent to 119.086 points while Shenzhen's slipped 1.31 per cent to 194.54. Hard-currency B shares are open to foreign and Chinese investors.

Market heavyweight CIMC, the world's leading container maker, was the biggest B-share decliner, dropping 6.63 per cent to HK$7.74 (US$1) after it reported that net earnings sank 14 per cent in 2002.

Although domestic markets rarely respond to outside factors, brokers said investors were nervous that a prolonged war in Iraq could hurt the global economy and Asian equities, indirectly affecting their Chinese counterparts.

"Investors sold today as they now see the war lasting longer than expected," said a floor trader at Shenyin & Wanguo Securities. "They were worried about an eventual impact on China from a weakening global economy and equity markets."

The benchmark Shanghai composite index shed 15.37 points to close at 1,462.40. Shenzhen's sub-composite index lost 33.19 to 2,979.09.

Chinese consumer products maker CATIC Shenzhen Holdings Ltd yesterday said that one of its subsidiaries has agreed to buy a property site from the listed firm's parent company for 67 million yuan (US$8.09 million).

The price represents a 2.8 per cent discount to the market value of the property that had been leased to the subsidiary Shenzhen Shennan Circuit Co Ltd and independent third parties, it said in a statement.

The property generated a net profit of 5.8 million yuan (US$700,000) in the past two years, it said.

The deal was aimed at controlling costs as Shennan paid out rents of 13.6 million yuan (US$1.64 million) to its parent in 2001 and 2002, the statement continued.

Shennan Circuit, 95 per cent owned by CATIC Shenzhen Holdings and five per cent by CATIC Shenzhen's parent company - CATIC Shenzhen Company - has been using the property as factory to make circuit boards and canteens for its staff, it said.

The acquisition will be funded by internal resources, it said.

On the foreign exchange market in Shanghai, China's yuan firmed two notches against the US dollar yesterday to close at 8.2771, its intraday high, as commercial banks sold more dollars on behalf of exporters, dealers said.

"Trade was quiet today and we saw most deals at 8.2771 in the afternoon session," a Beijing-based bank dealer said.

Dealers said they expected the yuan to hover around 8.2770 in the near term, little affected by the war and its impact on global politics and the world economy.

The Chinese currency is not freely convertible on the capital account and the central People's Bank of China keeps it locked in a tight range of 8.2760 and 8.2800 to the dollar to guard against shocks to the economy.

Central bank officials have said the yuan's range could be widened in the longer term to help counter any impact on trade and investment from China's accession to the World Trade Organization in late 2001. But they have given no timetable for the move.

Zhou Xiaochuan, newly appointed central bank governor, said early this month the yuan's exchange rate was "largely appropriate" and there was no hurry to change it.

Yesterday, the yuan eased against the Japanese yen to 6.9203 versus 100 yen from 6.8444 on Monday and weakened to 8.8534 against the euro from 8.7802. It closed unchanged against the Hong Kong dollar at 1.0613. (China Daily News)

Questions?Comments? Click here

China's Navigation Cost Increases Sharply for Iraq War

China Takes Measures to Maintain Steady Oil Supply

The US Must Not Put Pressure On the UN ( 3 Messages)

Saddam Vows to Globalize War if Attacked ( 5 Messages)

China's Z11 Helicopters Get Green Light for Civilian Use ( 5 Messages)

New Premier Comes from Grass Roots ( 2 Messages)

China Hopes War can be Avoided: FM ( 3 Messages)