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China's A and B shares fell for the third straight day yesterday as traders saw signs that institutional investors were pulling out over increasing fears about the spread of the deadly flu-like SARS virus.
Shanghai's B-share index fell 2.31 percent to 121.757 points and was down 5.15 percent so far this week after the government announced a spike in cases of severe acute respiratory syndrome (SARS) and fired two senior officials for mishandling the crisis.
Shenzhen's B shares slipped 1.41 percent to 217.15 points. Hard-currency B shares are open to Chinese and foreign investors.
A floor trader at a major Chinese brokerage said: "In contrast to the past two days of falls, yesterday saw some selling in large caps, meaning some institutions might be fleeing the market."
Large caps had been resilient due to institutional support.
But yesterday, yuan-denominated A shares in the China United Telecommunications Corp, the markets' second-largest capitalized firm, led all shares in volume and closed down 2.21 percent at 3.10 yuan (37 US cents) as a heavy 161 million shares changed hands.
Oil giant Sinopec Corp, the largest firm on bourses, fell 3 percent to 3.56 yuan (44 US cents).
Analysts said they expected slow but steady fall over the near term as investors awaited news.
Shao Rui, a senior analyst at Shanghai Securities, said: "Investors are nervous because of the SARS spread and we are not optimistic over the near-term trend.
"But it is still too early to say markets have established a firm downtrend as the trade volume has not been heavy so far."
Pharmaceutical counters continued to shine yesterday as punters bet the SARS outbreak would give them a shot in the arm.
Drug maker Beijing Tiantan Biological Products saw its A shares closing up their 10 percent daily limit at 15.70 yuan (US$1.90), having climbed 28 percent since March 26.
Chicken breeder Dajiang Group was the biggest B-share decliner, plunging 9.72 percent to 35.3 US cents. It has forecast another loss for 2002 after being in the red in 2000 and 2001.
Shanghai's A-share index ended down 1.69 percent at 1,613.33 points and its Shenzhen counterpart slipped 1.25 percent to 455.41 points.
China's yuan eased three notches against the US dollar to 8.2773 yesterday due to an increase in hard-currency demand from importers, dealers said.
The yuan moved between 8.2770 to 8.2774. Turnover rose slightly to US$380 million from Tuesday's US$350 million.
A dealer at a State-owned bank said: "Importers bought more dollars on the market today, helping push the yuan down slightly."
The Shanghai-based China Foreign Exchange Trade System will close from May 1 to May 5 for the Labour Day holiday, with trade to resume on May 6.
China's government called off the annual week-long holiday in response to the SARS outbreak.
Dealers said the market shrugged off fears that a more widespread domestic outbreak of SARS than previously reported might hit economic growth by subduing spending and tourism.
Yesterday, the yuan softened against the Japanese currency to 6.8844 per 100 Japanese yen from Tuesday's 6.8835. It weakened to 9.0680 versus the euro from 9.0028. It closed unchanged against the Hong Kong dollar at 1.0610.
(China Daily April 24, 2003)
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