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China's shares closed almost unchanged yesterday as investors sold loss-making companies on the approach of the corporate reporting season.
But overall trade was quiet in the absence of fresh market-moving factors.
Shanghai's B-share index inched up 0.02 percent to 116.471 points while Shenzhen's edged down 0.42 percent to 221.24. B shares are open to Chinese and foreign investors.
Machinery maker Shenzhen Tellus was the heaviest faller with a drop of 4.99 percent to HK$6.09 (US$0.78). Last week, the company forecast a loss for the first half of 2003 after being in the red for 2002.
Chronic loss-making trade firm Sunrise Holdings, which posted losses each year from 2000 to 2002, was the second biggest decliner, closing down 4.88 percent at HK$2.34 (US$0.30).
Brokers said investors sold loss makers on worries about interim results as China nears the half-year reporting season beginning July 1.
Analysts said they expected share indices to move narrowly around the current levels in the near term.
"A lack of market-moving news has kept many investors on the sidelines recently," said Guotai Junan Securities analyst Xu Yinghui. "We expect range-bound trade in the near term."
On the yuan-denominated A-share markets, investors continued to cash in on bank stocks, which had fallen since Monday after the government announced steps to restrict loans to developers and home buyers, brokers said.
Minsheng Bank closed down 2.94 percent at 10.57 yuan (US$1.28) while Pudong Development Bank dropped 2 percent to 12.26 yuan (US$1.48).
On Friday, the central People's Bank of China ordered domestic banks to increase downpayments for buyers of second homes from the standard 20 percent and offer loans only to finished housing projects, among other measures.
Brokers said investors expected the new measures to reduce bank lending and that pushed them to take profits in bank stocks, which had surged this year.
Shanghai's A-share index nudged down 0.17 percent to 1,630.661 points while its Shenzhen counterpart closed 0.35 percent lower at 451.62.
China's yuan ended a notch firmer against the US dollar at 8.2768 yesterday after the central bank and forex regulators reaffirmed a stable yuan policy and dismissed speculation of an imminent revaluation, brokers said.
The yuan stayed in a tight range of 8.2767 to 8.2769, moving near the strong end of a tiny 8.2760 to 8.2800 band enforced by the central People's Bank of China. Turnover was a healthy US$670 million, same as Monday's.
China said it would stick to its existing yuan policy despite US Treasury Secretary John Snow quoting Chinese officials as saying that Beijing planned to move to a more flexible exchange rate regime.
Snow's comments spurred forward premiums on the yuan to a historic peak of 1,900 points in early trade, a level effectively pricing a yuan near 8.09 in a year. They pulled back after government officials discounted a revaluation in the near term.
Non-deliverable forwards (NDF) on the yuan have been climbing since last week on a pick-up in trades betting on a revaluation.
(China Daily June 18, 2003)
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