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China's shares inched lower yesterday as investors sold airline stocks such as China Southern Airlines Co Ltd on fears that the return of SARS would hammer the travel industry, brokers said.
But drug shares emerged as star performers after Singapore reported a SARS (severe acute respiratory syndrome) case, the world's first case of the deadly virus since a global outbreak ended in July.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, shed 0.40 percent to 1,420.074 points. Shenzhen fell 20.76 points, or 0.66 percent, to 3,136.61 yesterday.
China Southern Airlines Co Ltd, also traded in Hong Kong and New York, saw its mainland shares fall 2.24 percent to 3.92 yuan (47.4 US cents) in heavy volume of 56.58 million shares, making it the most active counter.
The country's biggest carrier posted a loss for the first half of 2003, blaming the outbreak of SARS which kept planes grounded and potential travelers at home.
"The SARS news is dampening sentiment, while investors speculatively bought drug stocks, believing they would benefit from jitters over SARS," said analyst Simon Wang at Xiangcai Securities.
Medicine maker Nanjing Medical Co Ltd surged its daily limit of 10 percent to 7.69 yuan (92.9 US cents) after investors expected the SARS fears to give pharmaceutical firms a shot in the arm.
Shenzhen Accord Pharmaceutical Co Ltd was among the top gainers in the Shenzhen market, rising 1.61 percent to HK$3.79 (48.6 US cents).
Analysts said the SARS news was expected to further hit persistently weak market sentiment as investors fretted about a shortage of funds due to a massive impending share offer from a unit of the Three Gorges Dam project.
"The huge IPO was one of the reasons for the bearish sentiment," said analyst Lu Xinwen at China Merchants Securities.
"The market will likely move narrowly in the near term, with the large IPO on the way."
The Shanghai B-share index fell 0.61 percent to 98.710 points, while its Shenzhen counterpart edged down 0.47 percent to 223.78.
Shanghai copper futures clawed higher to close at fresh contract highs yesterday as the London Metal Exchange managed to hold above the key US$1,800 level despite an overnight fall, traders said.
The most active January contract inched up 20 yuan (US$2.4) to 18,280 yuan (US$2,208) a ton, while almost all others ended 10 yuan (US$1.2) to 40 yuan (US$4.8) higher. Combined volume fell slightly to a moderate 61,726 lots from 64,022 lots.
"Chinese investors largely ignored the LME and rose further as the overseas contract managed to cling above an important support level," a Shanghai trader said.
LME three-month copper ended Monday's kerb US$10 lower at US$1,814 a ton as some traders expect a downside correction in the short term, after recent strong gains.
Shanghai's spot copper rose 70 (US$8.5) to 80 yuan (US$9.7) to trade in a range of 18,190 yuan (US$2199.5) to 18,260 yuan (US$2207.9) yesterday, tracking futures.
China's yuan ended a notch weaker versus the US dollar at 8.2770 yesterday, at the stronger end of its managed trading range.
(China Daily September 10, 2003)
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