Investors' focus on dam leads decline of stocks
( 2003-11-19 09:22) (China Daily)
China's shares ended at their lowest closing level in nearly four and a half years yesterday as investors focused on the firm running China's Three Gorges Dam, the day's hot debutante, and trimmed holdings in other index heavyweights.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, fell 0.87 per cent to 1,316.562 points, the lowest close since June 4, 1999, when it finished at 1,285.06 points.
The final figure was adjusted from a provisional exchange closing level of 1,316.755 points yesterday and was also the lowest close for 2003, toppling the previous year low of 1,317.792 set just last Wednesday.
The Shenzhen sub-index dropped by 1.94 per cent to 3,110.67 points.
Yangtze Electric Power Co's A shares, which leapt 45 per cent on their debut to trump analysts' forecasts, closed up 43.72 per cent at 6.18 yuan (74.66 US cents), sucking in cash from the rest of the market, analysts said.
"All eyes were on Yangtze Electric, leading to a broad fall on the markets," said Guoxin Securities analyst Yang Bo.
Brokers said investors mainly swapped holdings in large caps for the newcomer, China's largest IPO (initial public offering) this year at 9.9 billion yuan (US$1.2 billion).
"Investors chased the new stock, betting on its longer term due to the country's booming power consumption," said analyst Zhang Yong of Shanghai Securities. "With money flowing into Yangtze Electric, other stocks wavered without fund support."
Oil giant Sinopec Corp, the largest company by market capitalization, closed 1.83 per cent lower at 3.76 yuan (45.4 US cents).
Baoshan Iron and Steel Co Ltd, the second largest, slipped 1.4 per cent to 6.33 yuan (76.48 US cents).
The Shanghai index has fallen 19.3 per cent since mid-April, battered by a bursting IPO pipeline and a government-ordered tightening of bank loans, which has thinned market funds.
"Yangtze Electric was almost the only bright star today, with no other stocks having the same level of attraction to investors," said analyst Luo Xiaoming at Ping'an Securities.
"We expect the markets to maintain their weakness in the near term."
Wuhan Iron and Steel Co Ltd said yesterday it would issue additional shares to raise up to 9 billion yuan (US$1.09 billion) to buy its parent's assets.
Its shares finished up 1.79 per cent at 5.12 yuan (61.9 US cents) as the company said the purchase would improve profitability with annual capacity expanding to 18 million tons of steel products.
China's yuan ended two notches stronger versus the US dollar at 8.2767 remaining at the stronger end of its managed trading range.
The central People's Bank of China yesterday issued US$35 billion in short-term bills, up from last week's US$20 billion, draining funds from the system after the latest statistics highlighted a worrying surge in money supply.
Tung Chee-hwa, chief executive of the Hong Kong Special Administrative Region, said yesterday the Chinese mainland will allow Hong Kong banks to take yuan-denominated deposits, make remittances and exchange the yuan for Hong Kong dollars.
The mainland will also allow yuan-denominated credit cards to be used in Hong Kong, Tung said.
The move, the first time overseas banks have been allowed to handle yuan-denominated business, comes after months of negotiations between Hong Kong and the mainland.
Tung said Hong Kong banks would be able to start conducting yuan-denominated business from late this year or early next year.
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