Stocks lose 4,200-point ground after sudden divings
By Li Zengxin (chinadaily.com.cn)Updated: 2007-06-20 16:07
The government will eliminate or cut tax rebates for more than 2,800 export items from July 1 - in the boldest move yet to rein in exports since it joined the World Trade Organization in 2001. The affected items account for 37 percent of all export products, the Ministry of Finance announced yesterday. Stock investors and analysts belive the new policy may affect public listed companies in their profitabilities.
Sources said that China's top legislature will discuss with the Ministry of Finance about issuing special treasury bonds for the country's foreign exchange investment at a six-day session beginning on June 24.
Experts said today the liquidity of capital in the stock market will not be affected by special treasury bonds that will be issued by the ministry.
According to a bulletin by the Shanghai Stock Exchange, 15 innovative securities houses issued 1.227 billion pieces of warrants for China Merchants Bank today. Calculated on yesterday's price of the existing warrants for the bank, or 2.590 yuan per piece, the issuance should have absorbed 3.2 billion yuan from the floating capital in the market today.
The year-long bull market has also led to a frenzy of speculation. The Shanghai supreme and intermediary courts announced that 6.3 billion yuan"sensitive" funds were involved in 105 cases they've dealt with from 2003 to 2006.
The State policy prohibits public funds to enter the stock market directly,
but it allows them to buy treasury bonds. "Managers of public funds like the
social security fund and educational funds have been purchasing bonds first,
then invest in the stock market by selling them off," said Qi Qi, vice chairman
of the Shanghai People's Supreme Court. "The safety of such investments depend
heavily on securities brokers' credit. When the stocks are plunging, the loss is
severe," he added.
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