Stocks News
- Stocks cap biggest weekly drop in five years
Date: 5-Feb-2007 Sources: (Shenzhen Daily)
DOMESTIC stocks had their biggest weekly decline in five years last week on concern that prices have climbed to unsustainable levels, after the Shanghai Composite Index more than doubled in the past 12 months.
'A correction is now in full swing,'' said Zhang Shuntai, who oversees the equivalent of US$127 million at Zhonghai Fund Management Co. in Shanghai.
Stock sales by companies including Ping An Insurance (Group) Co. and Industrial Bank Co. are fanning concern a share glut will sap investor demand.
The Shanghai Composite tumbled 4 percent Friday to close at 2673.21, bringing its weekly decline to 7.3 percent. The drop last week was the biggest since January 2002. The Shanghai and Shenzhen 300 Index, which tracks yuan-denominated A shares listed on the two exchanges, dropped 97.17, or 4.1 percent, to 2298.00. The measure plunged 8.6 percent last week, the biggest slide since it was introduced in April 2005.
Friday's drop in stocks was the biggest percentage move among markets included in global benchmarks.
China Vanke Co., the nation's biggest property developer, fell 1.23 yuan, or 7.9 percent, to 14.42 yuan (US$1.85) Friday. China Minsheng Banking Corp., the first privately controlled bank, dropped 0.78 yuan, or 6.4 percent, to 11.51 yuan. CITIC Securities Co., the biggest publicly traded brokerage, lost 2.61 yuan, or 7.3 percent, to 33.16 yuan. Baoshan Iron & Steel Co., China's No. 1 steelmaker, declined 0.61 yuan, or 6.5 percent, to 8.81 yuan.
The Shanghai Composite, the Shenzhen Composite Index and the 300 index have all climbed more than 100 percent in the past year. Shares in the 300 index are valued at 34 times earnings on average, the highest in the Asia-Pacific region. That's encouraging companies to sell shares.
Ping An, China's second-largest insurer, plans to raise more than US$4 billion in a domestic share sale and began taking bids from institutional investors Friday.
Chongqing Iron & Steel Co., a Hong Kong-listed steelmaker, said Jan. 30 it plans to sell 350 million shares in Shanghai starting Feb. 5.
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