China's shares slid yesterday as investors began to cash out of oil firms such as Sinopec Corp after a brief rally sparked by a looming US-led war in Iraq, brokers said.
Shanghai's hard currency B shares edged down 0.37 percent to 120.491 points while Shenzhen's slid 0.28 percent to 196.12.
Analysts said some punters began to sell oil firms to take profits after US President George W. Bush gave Iraq's Saddam Hussein just 48 hours to go into exile or face US military might.
For instance, Sinopec Corp, China's second largest oil firm, slipped 1.4 percent to 3.43 yuan (US$0.41) after climbing 2.7 percent a day ago.
But the picture was mixed as punters bet a war in Iraq would prop up crude prices -- and producers' bottom lines.
Sinopec Taishan Petroleum Co was the best A-share performer in Shenzhen, rising 2.4 percent to 12.79 yuan (US$1.54).
Analysts said it was tough to decide whether the Iraq issue would eventually benefit or hurt Chinese oil companies because strong oil prices result in high costs in the chemical production some of these firms were also involved in.
"Some punters sold and bought oil stocks very quickly, which led to price volatility in some oil shares due to uncertainty from the impact of high oil prices," said analyst Zhou Lin at Huatai Securities.
Daqing Lianyi Petroleum Co, which had finished the morning session up 0.5 percent, was down 0.8 percent at 8.33 yuan (US$1.01) by the close.
Shanghai's yuan-denominated A-share index fell 0.64 percent to 1,526.320 points while its Shenzhen counterpart edged down 0.85 percent to 436.13.
Analysts said sentiment was also depressed as the government was unlikely to issue market-friendly policies in the short run, which some punters had been betting on in recent weeks.
The National People's Congress, China's parliament, ended its two-week annual meeting yesterday after installing a new government leadership.
Bucking the trend were shares in property developer China Vanke Co after the firm said its net profit rose 2.3 percent year-on-year in 2002, buoyed by the robust real estate market and a company expansion.
Vanke was the second biggest B-share gainer in Shenzhen, rising 2.47 percent to HK$6.23 (US$0.75).
The benchmark Shanghai composite index, which groups B and A shares, nudged down 0.64 percent to 1,459.892 points.
China's yuan closed little changed at 8.2772 to the US dollar yesterday, ignoring comments by newly-appointed Premier Wen Jiabao on the Chinese currency, dealers said.
The yuan moved narrowly between 8.2770 and 8.2772 after closing at 8.2771 on Monday. Turnover rose to a decent US$530 million, up from Monday's US$430 million.
"A strong and stable renminbi is not only in China's interests, but is also a blessing for Asia and the world at large," Wen told a news conference at the close of the annual session of the National People's Congress.
The renminbi, is pegged to the US dollar. Officials from Japan, South Korea and the United States have urged Beijing to revalue the renminbi, saying it is undervalued and makes it hard for their industries to compete with China's.
Asked if the government planned to start to allow the renminbi to trade more freely, Wen said it would continue to "explore and perfect" the trading mechanism.
The central People's Bank of China keeps the renminbi closing between 8.2760 to 8.2800 against the dollar to guard against shocks to the economy.
(China Daily March 19, 2003)
