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China's shares closed down yesterday, hit by profit-taking in large-capitalized stocks which had outperformed the markets in a strong technical rebound this month, brokers said.
Shanghai's B share index, which had surged 14 per cent on a technical rebound since the start of the year, finished 2.29 percent lower at 125.038 points. Shenzhen's fell 1.62 percent to 202.04 points.
Hard currency B shares are open to foreigners and Chinese.
"Investors cashed out of market heavyweights today as they had risen sharply during the recent market rally," said an analyst at Guotai & Junan Securities.
Yuan-denominated A shares in China United Telecommunications Corp, the second largest firm by market capitalization on the mainland exchanges, dropped 4.24 percent to 3.16 yuan (38.16 US cents) after surging 25 per cent earlier this month.
Oil giant Sinopec Corp, the largest cap on the markets, closed down 2.35 percent at 3.32 yuan (40.09 US cents), having risen 16 percent.
Analysts said yesterday's technical correction occurred after the benchmark Shanghai composite index approached the psychologically important 1,500-point level.
"The 1,500-point level is where many investors can yield some profits and tend to cash out," said an analyst from Minan Securities.
"The markets need a correction to ease profit-taking pressure."
The composite index, grouping A and B shares, closed down 1.87 percent at 1,454.891 points after touching an intraday high of 1,489.551. It is still up 10 per cent from the start of the year.
Before the bounce, share prices had fallen more than 40 percent from their peak in June 2001, hit by a series of negative factors such as poor corporate earnings, frequent A share IPOs and corruption scandals.
Analysts said they expected the composite index to move in a range of between 1,430 and 1,500 points over the next few days.
On the B share markets, Shenzhen-listed agricultural diesel engine maker Changchai was the biggest faller, closing down 5.81 percent at HK$3.08 (39.48 US cents).
Changchai said yesterday it expected to post losses again in 2002 due to weak market conditions for its products after being in the red in 2001. It is scheduled to announce its 2002 results on April 10.
Changchai's earnings warning also triggered selling in other chronic loss-makers, brokers said.
Chicken breeder Dajiang Group, which made losses in 2000 and 2001, was Shanghai's worst B share performer with a fall of 3.7 percent to US$0.495. The company will report its results for last year on April 26.
Shanghai's A share index closed down 1.87 percent at 1,520.001 points and its Shenzhen's counterpart was down 1.91 percent at 438.85.
Shanghai copper futures closed sharply higher after active trade yesterday, buoyed by an unexpected rally on the London Metal Exchange sparked by news of a strike at Grupo Mexico's Cananea mine, traders said.
Shanghai's most active June 2003 futures rose 280 yuan (US$33.82) to 17,130 yuan (US$2,07) a tonne. Other contracts rose 230 yuan (US$27.78) to 450 yuan (US$54.35) a tonne as combined market volume more than doubled to a heavy 96,466 lots from 40,386 lots on Monday.
(China Daily January 22, 2003)
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