Chinese shares eased on Monday amid heavy selling of securities stocks after analysts forecast that a pilot scheme to allow margin trading and short-selling wouldn't start this year.
The China Securities Regulatory Commission said on Oct. 30 that broking firms could apply to offer margin trading and short-selling, which would allow brokerages to offer lending for share purchases, as of Dec. 1. The regulator, however, did not specify the documents needed for application.
The omission of that information was widely interpreted by analysts as indicating that the program, a move by the government to bolster stocks, was unlikely to start this year. "Brokerages will find they do not have sufficient time to prepare for the application within this year," said Chen Guohua, analyst with Guangzhou-based Huian Securities.
The benchmark Shanghai Composite Index fell 9.01 points to 1,719.77. The Shenzhen Component Index ended at 5,825, down 0.25 percent.
Aggregate turnover fell to 32.11 billion yuan (4.72 billion U.S. dollars) from Friday's 35.23 billion yuan.
Pacific Securities shed 6.02 percent to 13.74 yuan. Citic Securities fell 6.33 percent to 16.71 yuan.
Haitong Securities, the largest brokerage by market capitalization, fell by the daily limit of 10 percent to 16.6 yuan, reflecting investor concerns that the lock-up period of its 3.5 billion non-tradable shares would end next month, which could trigger a price plunge.
Financial stocks otherwise bucked the trend and posted a strong rebound after the central bank said last weekend that commercial lenders could put loan restrictions aside, in a move to support the growth of the world's fourth-largest economy.
Industrial and Commercial Bank of China rose 1.1 percent to 3.66 yuan. China Construction Bank, the country's largest mortgage lender, rose 1.83 percent to 3.90 yuan. China Life, the biggest life insurer, advanced 1.03 percent to 18.58 yuan.
Concerns over a slowdown in the real economy and slowing third-quarter profits of listed firms would continue to affect the market, which wasn't likely to post a sustained rebound in the short term, said Shanghai-based Shenyin & Wanguo Securities in a note to investors.
(Xinhua News Agency November 3, 2008)
