Stocks News
- Stocks slip over 2% amid global plunges
Date: 17-Aug-2007 Sources: (Shenzhen Daily)
THE main stock index in China tumbled more than 2 percent Thursday as institutions rushed to take profits on large-cap shares, and as concern mounted about plunging foreign markets and domestic economic policies.
Fund managers said that after largely ignoring turmoil in global markets in the past two weeks, the mainland market might finally be starting a significant pullback, though most believe huge amounts of money available for fresh investment will prevent any extended slide.
The Shanghai Composite Index fell as much as 3.25 percent before closing down 2.14 percent at 4,765.448 points, in its biggest percentage drop since the start of this month.
Turnover in Shanghai A shares shrank to a modest 127.1 billion yuan (US$16.7 billion) from Wednesday's 130 billion.
Gaining Shanghai shares outnumbered losers by 487 to 392, showing continued strength in many second-tier stocks, and no stock dropped its 10 percent daily limit, which suggested few investors were panicking.
But traders said the market was ripe for profit taking after surging 84 percent since the start of this year to a record intraday high Wednesday, and with the index near 5,000 points, which is viewed as strong resistance.
Plunges in Hong Kong and foreign exchanges have started to have some impact on mainland investor sentiment, analysts said.
'Global weakness has made more investors cash out from individual holdings and invest in funds. A further correction is quite possible - maybe 100 to 200 points daily - until global markets get back on the right track,'said Qian Xiangjing, analyst at China Securities.
The policy environment may also be worsening for mainland stocks.
The yuan sank to a fresh one-month low against the dollar Thursday as nondeliverable forwards priced in only 5.19-5.27 percent appreciation over the next year, against 6.18-24 percent just two days ago.
Concern about an imminent interest rate hike may also grow after the central bank drained funds from the money market Thursday with a 100 billion yuan special bill issue.
The central bank has conducted three other issues of three-year special bills this year, and after each one, it has raised benchmark interest rates roughly one week later.
Sponsor Results:
