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Stocks close up, with lowest turnover since May 29
By Li Zengxin (chinadaily.com.cn)
Updated: 2007-06-26 15:46 The plunges in the last two trading days have eliminated 1.408 trillion yuan off from the stock market. The market value of all securities in the two exchanges stood at 17 trillion yuan, down 7.7 percent from that of last Thursday, before the Shanghai Composite Index suffered a 280-point loss in merely two trading days. Yesterday, there were over 500 stocks sealed at the maximum proportion of price slump of 10 percent and prices of 1,000 shares closed lower than the lowest prices following May 29, when the stamp tax rate was raised to 0.3 percent overnight. Although there wasn't further tightening measure over the weekend, analysts believe the turbulence was the aftermath of multiple depressive pressures from last week. The depressive factors include the capital outflow prospect, with COSCO to be traded on the secondary market today, the approval of Bank of Nanjing and Bank of Ningbo for their initial public offerings; the incoming red chip return wave; the anticipated interest rate hike; fear for possible dilution in capital flow to the stock market by the qualified domestic institutional investor (QDII) scheme and the expectation on interest tax slash. Speculation is growing that the government plans to reduce or remove the tax on interest income. The 28th session of the Standing Committee of the National People's Congress (NPC), which has been in meetings since Sunday, may vote on a proposal authorizing the State Council to adjust or remove the tax on interest income, which could prompt investors to stockpile their money in bank savings accounts rather than buy stocks. The vote is likely to take place on Friday, the last day of meetings, according to sources close to the NPC and the central government. On the heels of Chinese securities and fund management companies being allowed to invest overseas, those eligible for applications for the QDII have already moved ahead with the preparation of QDII products, and the first QDII product managed by a fund company is in the offing. According to Xu Xiaosong, deputy general manger of China Southern Fund Management Co Ltd, their first QDII product, expected to raise US$800 million to US$1 billion, will focus on global funds and H-share investment. China's stock regulator plans to set up a special department to supervise all listed State-owned enterprises and financial companies with an aim to boost oversight of large-cap counters. The China Securities Regulatory Commission hopes the department can help improve the supervision system under the scenario that quality state companies, brokers and banks have been actively seeking listings. (For more biz stories, please visit Industries)
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