Indices slip on worries over gov't probe
( 2003-07-22 09:32) (China Daily)
China's shares weakened yesterday as nagging talk of a crackdown on corruption drove investors to flee companies expected to post disappointing first-half results.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, fell 0.75 per cent to 1,495.885. The index shed more than 2 percent on Friday as speculation of a clampdown swirled.
The Shenzhen sub-index also fell 18.37 points to end at 3,323.14.
Machinery maker Shenzhen Tellus, which wallowed in the red in 2002, was Monday's biggest B-share decliner on the Shenzhen market, sliding 5 percent to HK$5.51.
Sporadic worries over government probes into rampant irregularities have weighed on shares this year.
Those fears intensified in early June when news spread that property tycoon Zhou Zhengyi, the flamboyant former snack-shop owner ranked as China's 11th richest person by Forbes last year, was under scrutiny for alleged questionable loans.
"Renewed rumours have shaken investors' confidence," said Qian Weihai, an analyst at Jinxin Securities.
"While declines over the past two days were mainly driven by potential poor earners, the market has not shown evidence of a clear downward trend," he said.
Analysts said the Shanghai composite index was expected to hover at the psychologically important 1,500-point level.
Hainan Airlines was Shanghai's biggest B-share decliner and ended down 2.67 percent at US$0.620.
Brokers said Hainan Air's fall was driven by a weekend statement from rival Shanghai Airlines, which forecast it was likely to post a loss in the first half, reinforcing fears that carriers which are still coping with the fallout from the severe acute respiratory syndrome (SARS) outbreak could post worse results than expected.
Shanghai Air, China's sixth-largest carrier in traffic volume, saw its A shares edge down 0.38 percent to 7.89 yuan. Brokers said it avoided a heavy decline as it had underperformed in the market in recent months.
The stock had slid nearly 8 percent since April 20 when Beijing came clean on the true extent of the outbreak of SARS, while the Shanghai composite index fell a slighter 6.7 percent.
China's yuan closed two notches firmer versus the US dollar at 8.2768 yesterday, sticking to the stronger end of its managed trading range.
The yuan was sandwiched between 8.2767 and 8.2770 throughout the session, near the stronger end of a razor-thin band of 8.2760 to 8.2800 that the central bank usually enforces. Turnovers dropped to US$480 million from US$930 million on Friday.
In the futures market, Shanghai copper futures ended higher yesterday after the London Metal Exchange posted small gains in inter-office trade from Friday's close, traders said.
The most active December 2003 contract rose 50 yuan to 17,630 yuan (US$2,129) per ton, while other contracts gained 20 yuan to 70 yuan. Combined volume fell to 46,508 lots from Friday's healthy 71,678 lots.
LME three-month copper was quoted at US$1,724/US$1,727 a ton in yesterday's Asian trade, up from Friday's curb close of US$1,720, despite news that a strike was averted at the world's number three copper producer Grupo Mexico, traders said.
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