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China's benchmark stock inched lower yesterday, deepening a 19-month downtrend, but shares in select Shanghai-based firms defied the gloom on hopes they will benefit from the World Expo to be held in the city in 2010.
The Shanghai composite index, which groups hard currency B shares and yuan-denominated A shares, closed down 0.33 percent at 1,400.867 points with investor confidence depressed by a lengthy slump, brokers said.
Buying in Shanghai-based companies helped Shanghai's B share index end up 0.23 percent at 117.509 points.
Shenzhen's B shares nudged up 0.03 percent to 194.06, mirroring a rise in the Shanghai hard currency market. B shares are open to foreign and Chinese investors.
Blue-chip Shanghai Zhenhua Port Machinery Co was the star Shanghai B share performer, closing up 1.15 percent at US$0.88.
The stock has risen 7 percent since November 27, buoyed by hopes of a revenue boost as Shanghai's already booming economy gets a lift from the 2010 fair, which Shanghai won the right to host last week.
"Shanghai companies have bucked a market downtrend recently due to expectations of new business opportunities in the run-up to the 2010 Expo," said analyst Zhou Lin of Huatai Securities.
"But their rise has failed to spark overall trading interest due to weak sentiment after share prices have slumped."
The Shanghai composite index has fallen 38 percent since a peak in June last year, battered by a crackdown on market corruption and fears liquidity will wane in the face of frequent initial public offerings.
Analysts said they expected share prices to move narrowly, with the composite index hovering around the psychological 1,400-point level, towards the end of the year.
"There is a shortage of liquidity on the stock markets as brokerages are cashing in positions for year-end settlement," said analyst Hu Zhiguang at China Securities.
"But share prices will have little room to fall further after their steep downtrend this year," he said.
Yesterday, expectations of stronger corporate prospects after Shanghai won the 2010 Expo bid also boosted shares in travel agencies based in the city.
Hotel and realty management service provider Jinjiang Tower Co was the Shanghai B share market's second biggest gainer and closed up 1.04 percent at US$0.584. The stock has risen nearly 10 per cent since November 27.
Investors sold poor earners. Shenzhen-listed brewery and canned food maker Shenbao Industrial Co, which was barely in the black last year and the first half of this year, was the worst B share performer and fell 1.99 percent to HK$4.92 (US$0.65).
Chronic loss-making property developer Jiangsu Xincheng Co was Shanghai's biggest B share decliner, ending down 0.80 per cent at US$0.499.
On the foreign exchange market, China's yuan slid three notches to its lowest close against the US dollar since June yesterday, finishing at 8.2775 as banks bought more hard currency on behalf of importers, dealers said.
Dealers detected heavy dollar-buying late in the session that weighed on the Chinese currency, but said the yuan would remain firm over the short term because of an anticipated rise in exports toward the end of the year.
The yuan, which closed at 8.2772 on Friday, was shackled to a tight range of 8.2772 to 8.2775 yesterday. Turnover dipped to a moderate US$400 million from Friday's US$490 million.
"There was a sudden emergence of imports-related dollar buying late in the session today, pushing the yuan to close down slightly," said a European bank dealer.
"But the minor fall does not represent a downtrend. China's exports are expected to be strong during the Christmas and New Year periods and a steady inflow of hard currency will continue to keep the yuan strong."
(China Daily December 10, 2002)
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