Stocks News
- Shares drop sharply
Date: 2-Aug-2007 Sources: (Shenzhen Daily)
THE mainland stock market plunged nearly 4 percent yesterday after hitting a fresh record earlier in the day, as heavy profit-taking by mutual funds was triggered by sharp falls in Hong Kong's market, traders said.
The Shanghai Composite Index closed down 3.81 percent at 4,300.563 points, after rising as much as 0.70 percent to a record intraday high of 4,502.296 in the morning. It tumbled as much as 4.16 percent at one stage.
Stocks fell across the board, with losing Shanghai shares overwhelming gainers by 790 to 89. Turnover in Shanghai A shares expanded to 168.1 billion yuan (US$22.2 billion) from Tuesday's 148.3 billion. The Shenzhen Composite Index fell 3.8 percent to 1241.95.
Half a dozen traders and analysts said the market's tumble, the biggest fall in a month, was not caused by negative news or policy rumors, but occurred because stocks were vulnerable to profit-taking after surging 15 percent since July 19.
Many traders had seen 4,500 points as a target for the index and began selling near that level as Hong Kong stocks slid in response to weakness on Wall Street. Selling snowballed as mutual funds rushed to cash in gains.
'Funds seem to have decided to take some of their money off the table because the market rose so fast recently,'said Tang Zhenbin, analyst at Hongyuan Securities.
Technically, the index showed classic signs that its uptrend had ended for the short term, forming a bearish engulfing pattern at its high as 14-day momentum showed a negative divergence.
Some analysts said investors were concerned that authorities might take further action to cool the market if it climbed too fast.
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