Index down to three-week low | Shanghai Daily

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September 24, 2009

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Index down to three-week low

Shanghai's key stock index extended its losses yesterday to a three-week low as investors continued to worry about the volume of the new shares coming onto the market and about the capital-raising plans of companies already listed.

The benchmark Shanghai Composite Index dropped 1.89 percent to 2,842.72 points. Turnover shrank to 116.8 billion yuan (US$17.18 billion) from 137.8 billion yuan. Losers outnumbered gainers 761 to 107, with one stock unchanged.

The index has lost 18 percent from this year's high, reached on August 4.

"The contraction in turnover as well as the fact that nearly 90 percent of shares plunged indicates weak market sentiment," Shenzhen Guocheng Investment Consultants wrote in a research note.

Even the stocks of coal producers succumbed to the dour sentiment despite rising coal prices.

China Shenhua Energy Co, the nation's biggest coal producer, retreated 3.9 percent to 30.7 yuan, and Datong Coal Industry Co slumped 6.9 percent to 36.34 yuan.

"Investor confidence was damped by huge money-raising plans such as the additional share offer by the Pudong Development Bank and initial public offerings on both the main boards and the soon-to-open Nasdaq-style market," the note said.

Tomorrow, the first 10 companies approved to list on the new Growth Enterprise Market in Shenzhen will sell shares. The GEM is expected to open after the National Day holiday that begins on October 1.

Analysts said capital outflows were beginning to accelerate as some investors moved their money to the sidelines ahead of a holiday that will close the market. October is often considered a very volatile month in global equity markets.

Funds, brokerages and qualified foreign institutional investors are leading the retreat from the market, according to Guangzhou Bandung Securities.

Some investors will be watching the G20 meeting in the United States this week for clues about the steadfastness of commitments to loose monetary policy and stimulus spending in the world's biggest countries.

Property developers also fell yesterday after media reports that housing prices and sales volumes continued to drop this month in Shanghai, Beijing and Shenzhen.

Poly Real Estate Group Co, China's second-largest developer by market value, slid 3.4 percent to 22.47 yuan. China Enterprise Company lost 5 percent to 14.05 yuan.




 

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