Mainland stocks yesterday joined a global sell-off amid
intensifying worries of an impending US recession with the key
Shanghai index suffering the biggest one-day fall in six
months.
The Shanghai Composite Index slid 266.07 points to close at
4917.44, with 767 out of 909 stocks closing lower. It has fallen a
combined 10.4 percent within a week. The Shenzhen Component Index
tumbled 5.08 percent, or 920.46 points to close at 17210.93. The
turnover on the two bourses amounted to 199.8 billion yuan ($27.5
billion).
Investor pessimism over a US stimulus plan to prevent a
recession sent stocks plummeting worldwide.
In Hong Kong, the Hang Seng index tumbled 5.49 percent to close
at 23818.86, the largest percentage drop since the September 11
terror attacks. Japan's Nikkei Index fell 3.86 percent to close at
13325.94.
Germany's DAX was down 6 percent in morning trading, France's
CAC 40 slid 6.1 percent, while Britain's FTSE 100 dropped 5.1
percent.
Analysts said that the fears of a US recession are fueling the
bearish sentiment in China.
The market yesterday was also responding in part to Ping An of
China's announcement that it would issue A shares and convertible
bonds to raise 160 billion yuan ($22 billion), the largest
re-financing ever.
"The weak stock market performance of neighboring countries and
regions intensified the bearish sentiment of domestic investors,"
China International Fund Management Co Ltd said in a report
yesterday.
Chen Jiwu, deputy general manager of Fullgoal Fund Management Co
Ltd, said the negative impact of US economic woes on the global
capital markets would continue.
Large-caps led the fall yesterday, triggered by the sharp fall
of their H-share counterparts. Ping An A shares dived to the daily
limit to close at 88.39 yuan ($12.2), and its H share tumbled 6.33
percent to close at HK$68.05. PetroChina slid 5.53 percent to close
at 27.48 yuan ($3.8), and its H share shed 5.2 percent to close at
HK$11.3.
The price gap between A and H shares of dual-listed companies is
widening, said Wu Feng, an analyst at TX Investment Consulting Co
Ltd. The average premium of Chinese A shares over their H share
counterparts was as high as 98 percent.
"The fragile balance of the stock market, comprising overvalued
mainland stocks, can easily be upset by changes in the domestic or
overseas investment environment," Nicole Yuen, head of UBS China
Equities, said yesterday.
"The A-share market will see a lot of price fluctuations in
2008," said Yuen, but added that UBS is till interested in
investing in China's equity market.
Some analysts said that investors are worried about further
government tightening measures. But Jonathan Anderson, senior
economist at UBS China Equities, said the government is expected to
ease macroeconomic control measures in the next three or four
months.
(China Daily January 22, 2008)
