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China's shares seemed to be losing its rebound momentum slightly yesterday as investors fled firms expected to post weak results for the first nine months, including telecoms-gear maker Shanghai Posts and Telecommunications.
The Shanghai Composite Index inched up 0.861 points, or 0.06 percent, to end at 1548.965 points yesterday, while the Shenzhen's dipped 3.07 points, or 0.10 percent, to 3123.79.
The Shanghai index rose due to window-dressing buying by investment funds and other institutional investors in the run-up to the 16th Communist Party Congress, brokers said.
"We can feel more and more institutional support for the markets as the Party Congress draws near," said a senior analyst at Shanghai Finance Securities.
Chinese institutions often buy stocks ahead of major political events or public holidays.
But on hard-currency markets, available to foreign investors, Shanghai's B share index closed 0.29 per cent lower at 138.881 points while Shenzhen's fell 0.17 percent to 212.56 in thin trade, ending a three-session winning streak.
Shanghai Posts was the worst performer on the B share markets, sliding 2.68 percent to 79.8 US cents.
Investors expected the firm to post disappointing third-quarter results after the first-half net profit was down by a steep 45.17 percent from a year earlier, brokers said.
The firm also came under pressure after peer Nanjing Putian Telecommunications said on Tuesday it would likely post a third-quarter loss due to weak demand for networking hardware.
Nanjing Putian ended 0.15 percent off at HK$4.58 (58.7 US cents) after diving 3.33 percent on Tuesday.
China's more than 1,200 listed companies are required to post results for the first three quarters of 2002 by October 31, but most have yet to report.
Share prices had risen three straight sessions before yesterday, after falling nearly 10 percent in a seven-week downtrend mainly due to a liquidity crunch sparked by a large pipeline of initial public offerings.
"We expect the markets to continue their technical rebound in the near term as the benchmark Shanghai composite index showed signs of further rises late in the session," said a Galaxy Securities analyst.
But analysts cautioned that a looming major A-share IPO by a Chinese brokerage firm could squeeze liquidity and stop the latest technical rebound in its tracks.
CITIC Securities plans to raise a gross 2.76 billion yuan (US$333.7 million) in the first domestic IPO by a brokerage firm in China, but has yet to announce a timetable.
"We generally agree that institutional support will keep share indices on an uptrend," said a Shanghai Securities' analyst.
"But if CITIC Securities chooses to launch its IPO before the Congress, the market will fall as its nearly 3 billion yuan (US$362.7 million) worth issue is large by Chinese standards," he said.
Yesterday, the Shanghai-listed Zhengzhou Yutong Coach was fined 300,000 yuan (US$36,276) by the China Securities Regulatory Commission over irregular accounting practices.
The regulatory authority said the company falsified financial statements in its 1999 annual report and ordered the company to rectify the matter within specified period. The company's former chairman, general manager and other senior management also received fines ranging from 30,000 to 50,000 yuan (US$3,628 to US$6,045).
(China Daily October 24, 2002)
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