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China's A and B shares fell yesterday as investors sold market heavyweights such as China Merchants Bank, but bargain-hunting lifted prices off intraday lows as a key index neared its lowest close of this year.
The benchmark Shanghai composite index, which also includes yuan-denominated A shares, ended down 0.34 percent at 1,379.195 points after touching an intraday low of 1,367.312, approaching a 2002 closing low of 1,358.691 set on January 22.
Shenzhen's sub-index lost 21.49 points, or 0.76 percent, to finish at 2,796.81.
Shanghai's B-share index inched down 0.30 percent to 115.084 points, while Shenzhen's B shares fell 0.33 percent to 190.66. Hard-currency B shares are available to foreign and Chinese investors.
Shares in Merchants Bank, the largest of China's four listed banks, fell 0.46 percent to 8.65 yuan (US$1.04) after the bank listed 18.85 percent of a 1.5 billion-share initial public offering after an eight-month lock-up period ended on Tuesday.
The listing allowed the institutional investors to sell their shares at a premium of around 20 percent over the IPO price of 7.30 yuan on Tuesday, triggering a wave of profit-taking, brokers said.
"Recent steep falls in share prices have caused a pessimistic mood to prevail on the stock markets," said analyst Ding Chaoyu of United Securities.
"Clear-cut bearish market conditions have scared away many investors, keeping indices on a continued downtrend," he said.
The Shanghai composite index was down 38.82 percent from its peak in June last year on corporate health worries sparked by a crackdown on market corruption and fears that liquidity will shrink due to frequent initial public offerings.
Analysts said the markets have also been hit recently by brokerages cashing in share positions for year-end settlements.
The Shanghai composite was likely to test the year's closing low of 1,358.691 points, reached on January 22, or an intraday low of 1,339.200 hit on January 29, they said.
Yesterday's selling on the B-share markets focused partly on poor earners as worries about corporate performance re-emerged with the year drawing to an end, brokers said.
(China Daily December 12, 2002)
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