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China's shares fell for the fourth straight day yesterday as investors cashed out of steel stocks such as index heavyweight Baoshan Iron and Steel Co.
The benchmark Shanghai composite index, grouping hard currency B shares open to foreign investors and yuan-denominated A shares, fell 0.97 percent to 1,538.754 points.
The index has fallen every day this week, slipping a combined 1.8 percent so far following a 2.4 percent rise last week.
Baoshan Iron and Steel, the listed arm of China's top steel producer, was one of the most active counters yesterday and ended down 2.06 percent at 5.22 yuan (US$0.63).
The stock is still up 27 percent since the start of the year as investors snapped up steel plays in anticipation of strong results due to surging prices of steel products, brokers said.
Another major steel maker, Maanshan Iron and Steel Co, fell 1.41 percent to 4.19 yuan (US$0.51), but was still up 39 percent from the beginning of 2003.
Analyst views on the near-term trend varied.
"There are no major negative factors despite the market correction this week and share indices do not have the potential to fall further," said Zhang Qi of Haitong Securities.
But Pei Xiaoyan of United Securities said market sentiment had been weakened by this week's falls.
"Yesterday's fall was also accompanied by expanded volume," Pei said. "We expect the market to extend its losing streak."
Dai Yizhong of Guotai Junan Securities said he expected the Shanghai composite index to move narrowly in a range between 1,520 and 1,580 points over the next few days.
Shanghai's B-share index closed down 0.87 percent at 115.392 points and Shenzhen's slipped 0.99 percent to 219.97 after investors sold poor earners, including telecommunications equipment makers, brokers said.
Eastern Communications ended down 1.31 percent at US$0.602 while Nanjing Putian fell 1.72 percent to HK$4.00 (US$0.51). Both posted heavy losses for 2002.
Shenzhen's A-share index fell 1.18 percent to 446.19 points and Shanghai's slipped 0.97 percent to 1,611.307.
China's yuan closed a notch weaker against the dollar at 8.2770 yesterday due to rising demand from importers, dealers said.
The yuan moved narrowly between 8.2768 and 8.2771 as turnover fell to a thin US$390 million from Wednesday's US$670 million.
"Although a rise in importer dollar demand pushed the yuan a little lower, that does not represent a trend," said a domestic bank dealer in Beijing.
China said on Tuesday it would stick to its existing yuan policy despite US Treasury Secretary John Snow quoting Chinese officials as saying Beijing planned to move to a more flexible exchange rate regime.
Dealers also said they did not expect Snow's comments to have impact on the yuan's tiny trading range of 8.2760 to 8.2800 which the central People's Bank of China generally enforces.
The yuan is not freely convertible on the capital account and its movements within the government-set range are decided by trade and investment flows.
China's actual foreign direct investment rose 39.5 percent on year to US$5.45 billion in May, while exports jumped 37.3 percent in the same month, creating a surplus of US$2.23 billion, official figures showed.
The yuan firmed yesterday to 6.9767 versus 100 Japanese yen from Wednesday's 6.9955 and strengthened against the euro to 9.6175 from 9.7491. It rose a notch against the Hong Kong dollar to 1.0609.
(China Daily June 20, 2003)
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