Chinese stocks nosedive over 5%
Updated: 2008-01-21 16:44
The Shenzhen Component Index dropped 920.46 points or 5.08 percent to 17210.93. Turnover was 69.5 billion yuan. Of the A shares, 532 ended lower, 64 climbed up and 83 remained unchanged.
Shenzhen Component Index
Source: sina.com.cn
A one-and-half year bull run in the stock market is set to slow down, if not turning into a sluggish bear, said analysts. According to fourth-quarter reports from 277 mutual funds managed by China's 40 fund companies, a majority of the stock funds have reduced their holdings in A shares. When the market tumbled last week, dumping of shares by these mutual funds was more apparent, sources said.
In addition, although not a major cause of today's plunge, the expected second stock trading board may add more pressure for falling prices. Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, said at a financial forum over the weekend that the preparation work for the launch of stock index futures and a growth market have been completed. The news is actually no surprise and neutral to investors, but may be interpreted the wrong way in the midst of market turmoil like this, said analysts.
It seemed there was discouraging news from every corner of the world, said a sad retail investor. The US economy is closer to a recession as economists believe California and Florida, the biggest and fourth-biggest states of the US, have slowed down. Wall Street investment bank Merrill Lynch last week announced a loss of US$10 billion in the fourth quarter last year, its biggest quarterly loss since 1994.
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