Chinese shares continued on a downward trend Friday after tumbling 3.87 percent the previous day. Analysts said investor confidence was undermined by falling corporate profits and no further government stimulus plans.
The benchmark Shanghai Composite Index fell 1.81 percent, or 38.4points, to 2,082.85 points. The Shenzhen index slid 2.18 percent, or 169.68 points, to 7,608.22 points.
Total turnover was 152.24 billion yuan (22.29 billion U.S. dollars), down from 198.52 billion yuan on Thursday.
Losers outnumbered gains by 794 to 78 in Shanghai and 706 to 49 in Shenzhen.
Investor confidence was dampened as listed companies continuously reported profit declines this week. Also, no more foreseeable government stimulus packages are on the way, analysts said.
The Chinese government unveiled stimulus plans for the nonferrous metals and logistics sectors Wednesday. It was the last two of ten major industries which were supposed to become China's economic engines.
So far, 102 companies have released final full-year earnings reports. Combined net profit for 2008 was 15.1 billion yuan, up 16 percent. The year-on-year growth rate plunged from more than 220 percent in 2007.
Of the 920 companies that have released un-audited earnings estimates for 2008, only 41 percent predicted profit gains. Combined net profit in these reports was estimated to tumble 46 percent year-on-year to 159.8 billion yuan.
The non-ferrous metals, semiconductor and chemical sectors led the retreat, dropping 8.22 percent, 7.59 percent and 7.04 percent, respectively.
More than 15 non-ferrous metal shares fell by the 10-percent daily limit, including Xiamen Tungsten and Sichuan Hongda, which also fell by the limit Thursday.
Bank shares rose against the falling trend, as China's banking industry reported 583.4 billion yuan in after-tax profits last year, up 30.6 percent year-on- year.
Liu Mingkang, chairman of the China Banking Regulatory Commission, said at a press conference that the impact of the financial crisis on China's banking system is limited and the risks are under control.
Huaxia Bank rose the most by 4.65 percent to 9.23 yuan. Shanghai Pudong Development Bank saw shares price rise 3.31 percent to 17.78 yuan.
(Xinhua News Agency February 27, 2009)
