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China's shares closed down yesterday as domestic A shares in China United Telecommunications Corp Ltd (China Unicom) made a poor debut due to weak investor sentiment that has depressed markets for weeks.
The Shanghai composite index, which groups both A and B shares, closed down 27.627 points, or 1.77 percent at 1,535.366 points.
Shenzhen sub-index also edged down 56.68 points, or 1.77 percent, to 3141.26.
Shenzhen's B-share index fell 1.53 percent to 221.19 points while Shanghai's slipped 0.99 percent to 140.027.
Turnover on the hard-currency B-share markets, China's only markets open to foreigners, was tiny at US$12.55 million in Shanghai and HK$63.66 million (US$8.16 million) in Shenzhen.
Unicom, China's No 2 cellular carrier, listed 55 percent of its giant 11.5 billion yuan (US$1.4 billion) A-share issue, off limits to foreigners, in Shanghai yesterday.
Its A shares closed up 24.78 percent at 2.87 yuan (34.7 US cents) from an IPO price of 2.30 yuan (27.8 US cents) after touching a high of 3.15 yuan (38 US cents).
Analysts had expected the shares to trade around 3.50 yuan (42.3 US cents).
While the debut was healthy by international standards, it was weak for China where smaller IPOs (initial public offerings) - usually priced cheap to ensure strong subscription - sometimes triple upon listing.
"Unicom's poor debut showing indicated weak market conditions," said analyst Hu Zhiguang of China Securities.
"It, in turn, further weakened investors sentiment," he said.
Frequent A-share issues, including the Unicom offer, a government crackdown on market corruption and poor corporate earnings have pushed China's stock market down more than 8 percent since early September.
By yesterday's close, Unicom was the lowest-priced A share.
The second lowest, Sinopec Corp, finished at 3.21 yuan (38.8 US cents), off 5.59 percent from Tuesday's close.
Sinopec launched China's biggest domestic IPO, an 11.8 billion yuan (US$1.43 billion) offering, in August 2001. Unicom's A-share issue is the second largest.
While some analysts said there should be little direct correlation in the moves between the two counters, the weak start of Unicom's A shares helped push down its Hong Kong shares, which ended 1.12 percent lower at HK$4.4 (56.4 US cents) yesterday.
Analysts said yesterday's fall after recent weakness might help brew a technical rebound in the next few days but might also help establish a medium-term downtrend.
"Poor performance of large-capitalized companies like Unicom and Sinopec has greatly hurt investor confidence," sad analyst Chen Huiqin of Huatai Securities.
"We expect continued market weakness in the medium term," she said, adding that the benchmark Shanghai composite index might fall to around 1,520 points.
On China's B-share markets, selling focused on chronic loss-making companies.
Great Ocean Shipping Co was Shenzhen's biggest decliner with a fall of 4.78 per cent to HK$3.19 (40.1 US cents).
Another loss maker, Forever Bicycle Co, was Shanghai's biggest faller, down 2.99 per cent at US$0.648.
Shanghai's A-share index closed 1.78 per cent lower at 1,602.293 points, while its Shenzhen counterpart was down 1.97 per cent at 472.98.
(China Daily October 10, 2002)
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