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China's shares closed down yesterday as investors punished companies planning additional share issues amid lingering worries over thin liquidity, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, finished 0.41 percent lower at 1,425.73 points.
The Shenzhen index fell 24.31 points to 3157.37 points.
Shanghai Broadband Technology Co Ltd's A shares were the biggest decliner, diving 8.3 percent to 11.49 yuan (US$1.39) after the telecommunications equipment maker announced a three-for-10 rights issue.
Analysts said market sentiment was shaky as investors were concerned about a shortage of funds amid a slew of share offers, including an impending US$120 million IPO from Yangtze Electric Power Corp, a unit of the conglomerate that is building the Three Gorges Dam, the world's largest hydropower project.
In another high-profile IPO, Huaxia Bank's 1 billion A shares will begin trading on Friday after it launched an offering of more than 5 billion yuan (US$604.2 million) two weeks ago.
"Investors are reluctant to trade as they expect the market to remain weak in the near term with two IPOs on the way," said analyst Xu Yinghui at Guotai Junan Securities, referring to the large scale of the two IPOs.
But analysts also said recent market falls had eased selling pressure and room for further losses was limited.
"The market may even turn around in the medium term as there are no big IPOs expected in the rest of the year," said analyst Pei Xiaoyan at United Securities.
Analysts said the Shanghai composite index was likely to move in a tight box between 1,400 and 1,450 points this week.
The index traded narrowly over the past week after losing more than 8 percent since mid-July, battered by factors including a government tightening of bank loans.
On yesterday, bargain-hunting helped prop up tourism counters such as Huangshan Tourism Development Co Ltd, brokers said.
The tourist agency's B shares ended up 1.24 percent at 49 US cents as investors bet the tourism sector would recover after the impact of SARS waned.
Huangshan Tourism has posted a first-half net loss, blaming the outbreak of SARS (severe acute respiratory syndrome).
Shanghai copper futures climbed yesterday, but gains were subdued as the London Metal Exchange fell back from multi-year highs in inter-office trade, traders said.
The most active January contract jumped 150 yuan (US$18.14) to 18,260 yuan (US$2,206) a ton, while almost all others ended up 130 (US$15.71) to 180 yuan (US$21.77).
Combined volume rose to a moderate 64,022 lots from a thin 45,482 lots on Friday.
"The steep rise in London boosted sentiment in the Chinese market," a Shanghai trader said.
"But some investors were concerned about recent fluctuations on the LME, and that capped the rise in Shanghai."
Shanghai's spot copper rose 90 yuan (US$10.88) to 120 yuan (US$14.51) to trade in a range of 18,120 yuan (US$2,191.05) to 18,180 yuan (US$2,198.30) yesterday, tracking futures.
China yuan ended a notch firmer versus the US dollar at 8.2769 yesterday.
(China Daily September 9, 2003)
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