Sluggish Stock Market Plummets to 7-month Low

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Last updated at: (Beijing Time) Tuesday, August 19, 2003

Sluggish Stock Market Plummets to 7-month Low

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Chinese shares fell to their lowest in more than seven months Monday as investors took a wait-and-see stance amid persistent weak sentiment, disappointed that regulators did not announce steps to boost shares last week.

The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, finished down 0.35 per cent, or 5.114 points, at 1,445.089 points, the lowest finish since January 10.

The index has slid 6.52 per cent since mid-July, hit by a slew of negative factors including too many stock offers.

While the Shenzhen sub-index also fell 5.83 points, or 0.18 per cent, to close at 3,255.84 points yesterday.

Trade was slack amid weak investor confidence, after China's top regulator told a seminar of brokerage executives in Beijing last week that the government would tighten supervision over stock markets, dashing widespread hopes he would announce supportive policies, brokers said.

"Investors preferred to remain on the sidelines, with further weakness to be seen,'' said analyst Jin Guanfeng at Haitong Securities. "The bearish market needed something positive to prop it up, but the meeting failed to yield market-boosting steps.''

China Southern Airlines, the country's largest carrier by fleet size, was yesterday's most active counter, rising 1.29 per cent to 3.93 yuan.

The market heavyweight, also traded in Hong Kong and New York and due to report results on August 29, is likely to post a loss for the first half of 2003 as the outbreak of SARS (severe acute respiratory syndrome) hits its bottom line.

"Expectations that the aviation industry would recover from the SARS impact in the second half stimulated investors' interest in China Southern,'' said analyst Song Huaisong at Fujian Xingye Securities.

Property developer Shanghai Lujiazui Finance and Trade Zone Development Co was among the most active B shares on Monday, dipping 1.91 per cent to US$0.669.

The developer signed a land use contract with Sun Hung Kai Properties Ltd, Hong Kong's biggest developer by sales, on Friday to start construction of a US$1 billion property development in Shanghai next year.

The Shanghai B-share index closed 4.34 per cent lower at 100.886 points, while its Shenzhen counterpart ended down 0.95 per cent at 230.14.

In the futures market, Shanghai copper futures gained ground yesterday with some Chinese investors betting on a rise on the London Metal Exchange after the overseas market fell on Friday, traders said.

January copper futures, which replaced December to become the most active contract, rose 70 yuan to 17,880 (US$2,159) a ton.

Other contracts ended 20 yuan to 70 yuan higher, with combined volume rising to a thin 54,840 lots from Friday's 40,528 lots.

The trading time was shortened yesterday as trade opened 45 minutes late due to "technical maintenance,'' an exchange official said.

"Shanghai copper rose as some Chinese bought on hopes that the LME might gain in today's session to recoup losses on Friday,'' said a trader in Shanghai.

"But it wasn't a very big rise as some people exercised caution.''

LME three-month copper fell US$17 to US$1,736 a ton by Friday's kerb close due to fund selling and book squaring over the weekend, traders said.

Spot copper in Shanghai rose a slight 20 yuan to a range of 17,630 yuan to 17,690 yuan on Monday, tracking futures.

Shanghai aluminium futures were mixed yesterday, ending 20 yuan higher to 30 yuan lower with combined volume dwindling to 8,488 lots from Friday's 10,484 lots.

LME aluminium slipped to US$1,426.50 from US$1,434 on Friday.

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