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Stocks fall on economic slowdown concern

(Shanghai Daily)
Updated: 2007-03-05 14:24

Chinese mainland's stocks fell, extending last week's tumble, on concern government plans to slow growth of the world's fourth-largest economy will dent corporate earnings.

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TheShanghaiComposite Index, which tracks the bigger of domestic stock exchanges, fell 1.3 percent to 2,794.37 at mid-day break. The Shenzhen Composite Index, which covers the smaller one, lost 0.7 percent to 725.12.

"Slower economic growth will pressure the stock market by damping corporate earnings," said Zhang Ling, who manages the equivalent of US$1.1 billion at ICBC Credit Suisse Asset Management Co. inBeijing.  "don't see any major industries to churn out optimistic earnings, because of the government's plans to rein in growth."

China is seeking slower economic growth of eight percent this year, Premier Wen Jiabao said today.

Minsheng Banking, the nation's first privately controlled lender, dropped 0.47 yuan, or 4.1 percent, to 11.03 yuan. Citic Securities Co, China's biggest publicly traded brokerage, slid 1.30 yuan, or 3.5 percent, to 35.65 yuan.

Baoshan Iron & Steel Co, China's biggest steelmaker, lost 0.33 yuan, or 3.5 percent, to 9.05 yuan. Daqin Railway Co, the operator of China's biggest coal transport network, fell 0.41 yuan, or 3.7 percent, to 10.82 yuan.

The same target in 2006 failed to stop the world's fourth-largest economy from expanding by 10.7 percent, the fastest pace in 11 years. The central bank raised interest rates in April and August and last month ordered banks to set aside more money as reserves for the fifth time in eight months, seeking to prevent the economy from overheating.