Stocks News
- China shares close 0.69 pct lower
Date: 14-May-2007 Sources: (Xinhua Online)
China's share prices ended four days of bullish trading in decline on Friday, following markets in Hong Kong and the United States, which slumped on Thursday due to disappointing retail sales and a trade deficit.
The benchmark Shanghai Composite Index slid 0.69 percent, or 28.02 points to close at 4,021.68 points on a turnover of 186.6 billion yuan (24.3 billion U.S. dollars). It traded between 3,949.37 and 4,039.67.
The Component Index of the smaller Shenzhen Stock Index lost 0.73 percent, or 84.23 points, to finish at 11,489.93 points on a turnover of 92.1 billion yuan.
Analysts said the slump came after profit taking, the introduction of credit tightening measures, and slower growth in China's exports in April.
The People's Bank of China (PBoC) began on Friday to issue 101 billion yuan of central bank bonds earmarked for commercial banks to squeeze their lending capacities.
Investors were also concerned that apart from open market operations, the PBoC would raise reserve ratio requirements and interest rates after it pledged to continue to manage excess liquidity on Thursday.
Meanwhile, China's exports in April rose 26.8 percent to 97.45 billion U.S. dollars, down one percentage point from the first quarter of the year.
Analysts said if the trend continued, the profits prospects of the listed exporters would be affected.
Investors started to show caution by locking in profits after the key Shanghai index breached the 4,000-mark barrier.
Analysts said the financial stocks are under profit-taking pressure after the issuance of 101 billion yuan of central bank bonds and amid concerns of more potential credit tightening measures.
Heavyweights led the loss. The Industrial and Commercial Bank of China fell 1.04 percent to 5.71 yuan, and the Bank of China slumped 0.81 percent to 6.09 yuan.
China Life, the nation's largest insurer, slid 2.66 percent to 39.22 yuan, and Citic Securities, the nation's largest listed brokerage, lost 1.41 percent to 55.98 yuan.
China Petroleum and Chemical Corporation, also known as Sinopec, ended recent strong gains as it fell 0.63 percent to 12.66 yuan.
More volatility is expected in the near future, according to Shenyin Wanguo Securities, but stocks will continue the bullish run in the long term as long as increasing investors transfer their money to equity markets from low yielding bank deposits.
Investors opened an average of more than 330,000 accounts with China's A-share stock exchanges each day from Tuesday to Thursday, according to the China Securities Depository and Clearing Corp. Ltd.
Fu Meiwang, an analyst at Haitong Securities, advised investors to buy more steel and coal stocks that have lower price-earnings ratios for safer gains.
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