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A 10 percent plunge in market heavyweight China International Marine Containers (Group) (CIMC) shares dragged China's hard currency B stock indices down to four-month lows Thursday.
The second largest capitalized firm on the Shenzhen B share market fell the daily limit to HK$6.90 after the container maker said two foreign stakeholders planned to list stocks equivalent to 24.51 percent of its share capital.
The statement triggered worries the foreign partners planned to withdraw from the company by selling the B shares after the listing, traders said.
The Shanghai composite index, tracking A and B shares, dropped 24.291 points, or 1.58 percent, to finish at 1513.097, while the Shenzhen sub-index also fell 65.88 points, or 2.10 percent, to close at 3070.65.
Shenzhen's B index ended down 4.29 percent at 210.66 points, its lowest close since June 19. Shanghai's B index ended down 1.98 percent at 137.042 points, the lowest close since June 17.
Turnover on the B share markets, open to foreigners and Chinese investors, was thin at US$1.04 million in Shanghai and HK$95.93 million (US$12.3 million) in Shenzhen.
"The plunge in CIMC led to broad market selling today, in particular in the afternoon session," said analyst Zhong Jingteng of Ping'an Securities.
Traders said many foreign partners had sold their B shares after listing, partly because China's opening of the hard currency share markets to domestic investors had caused valuations to soar.
China allowed citizens into B shares in February 2001, causing prices to triple in three months. Indices subsequently fell back in a broad market downtrend but are still up 65 percent from before the opening.
Chongqing Changan Automobile Co was the most actively traded and the third top decliner on the B markets, falling 6.71 per cent to HK$3.06 on volume of 5.27 million shares.
Japan's Suzuki Motor Corp said in late September it had cut its stake in Changan, China's biggest minivan maker.
Guangdong Electric Power Co, Shenzhen's largest B share firm by market capitalization, closed down 3.69 percent at HK$4.44 on volume of 2.67 million shares.
Yesterday's fall followed a market downtrend over the past six weeks due to a slew of negative factors, including liquidity worries triggered by frequent share offers, poor corporate earnings and a crackdown on market irregularities.
"Investor sentiment is very weak and we expect the markets to continue a downtrend in the near term," said analyst Dai Yizhong of Guotai Junan Securities.
Analysts said the benchmark Shanghai composite index, which has fallen 9.6 percent since September 3, was likely to test the psychologically important 1,500 level.
(china.org.cn October 18, 2002)
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