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BIZCHINA / News |
Big-caps drag down sharesBy Jin Jing (China Daily)
Updated: 2007-11-06 10:13 Led by big-cap companies, mainland stocks fell yesterday, despite the strong debut of PetroChina on the Shanghai Stock Exchange. The benchmark Shanghai Composite Index slid 2.48 percent, or 143.36 points, to close at 5634.45. Gainers outnumbered losers by 613 to 224. The smaller Shenzhen Composite Index dropped 0.68 percent, or 9.44 points, to close at 1377.2. The total market capitalization of the two bourses for the first time crossed 30 trillion yuan to 33.366 trillion yuan largely because of big-cap PetroChina's listing, according to statistics from TX Investment Consulting Co Ltd. The plunge of big-cap stocks, mainly in banks and the real estate sector, was because of institutional investors decreasing holdings in their investment portfolio to buy PetroChina. The ripple effect from the huge fall of H shares also dragged down the prices of dually listed stocks. The government's move to require mutual funds to limit the size of their funds at the same level as stipulated in the prospectus within six months also added to investors' worries about tighter liquidity in the market, analysts said. Most large-cap stocks fell in yesterday's trading. The Industrial and Commercial Bank of China dropped 4.16 percent to close at 8.29 yuan. China Life slid 3.71 percent to 67.98 yaun. Real estate developer Vanke A plunged 8.07 percent to close at 35.9 yuan while China's largest coal producer Shenhua Energy tumbled 3.62 percent to 74.29 yuan. "Institutional investors, including mutual funds, are adjusting their investment portfolios after PetroChina began trading yesterday, in order to gain fire power in playing the stock index futures," said Zhong Hua, an analyst at Changjiang Securities. "The high opening price of PetroChina and the high price- earnings ratio of big-cap stocks triggered profit-taking," said a report from Industrial Fund Mangement Co Ltd yesterday. "The government's strong warning to fund management firms against overexpansion prompted some mutual funds to decrease their stock holdings," said Zhu Haibin, an analyst at Essence Securities. Wu Feng, an analyst at TX Investment Consulting Co Ltd, said the listing of central enterprises in their entirety is expected to be a new investment focus because of the acceleration of the government's pace in supporting this issue. Li Rongrong, minister of the State-owned Assets Supervision and Administration Commission, said last Friday that the government will quicken the pace of central enterprises' share reform in the next three years and support qualified enterprises to be listed in their entirety. |
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