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China's shares ended lower Wednesday as investors continued to dump poor earners to raise cash ahead of a giant stock offer by a firm spearheading theI Three Gorges Dam project, brokers said.
The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, fell 0.57 percent to 1,361.487 points.
The Shenzhen sub-index closed down by 0.05 percent to 3,193.18 points.
Chipmaker Shanghai Belling dived its 10 percent daily limit for a second successive session to 8.16 yuan (98.6 US cents) after posting a 69 percent slump in net profits in the year to the third quarter of 2003.
Yangtze Electric Power Co Ltd plans to issue 2.326 billion A shares in early November to raise net proceeds of 9.83 billion yuan (US$1.19 billion) to become the fourth largest initial public offering (IPO) on mainland bourses.
It had planned to issue shares in September to help fund China's massive US$22 billion Three Gorges Dam project, but regulators forced it to delay the sale as the market was already straining under other offers.
"Yangtze Electric is favoured by investors who expect it to profit from booming domestic power consumption," said analyst Zhang Yun at Shanghai Securities.
"Investors are also paying more attention to companies' performance, punishing loss makers."
The Shanghai index has slid 16.5 percent since mid-April, versus a 40.5 percent rise in neighbouring Hong Kong, due to factors including a government-ordered tightening of bank lending.
Companies with good profit growth bucked the trend.
Zhenhua Port Machinery Co Ltd's B shares were the top gainer, surging 7.44 percent to US$1.069 after it said Wednesday third-quarter net profit more than doubled.
China Merchants Bank, the biggest of the country's five listed banks by capitalization, was one of the most actively traded counters, climbing 3 percent to 9.96 yuan (US$1.2).
The lender posted a 37.6 percent jump in third-quarter net profit, buoyed by lending growth in the booming economy.
But analysts said market weakness could linger, as Chinese institutions typically need to prepare cash for annual book settlements at the end of a year, draining market liquidity.
"The market will continue to fall and search for a bottom as investor confidence is still poor," said analyst Luo Xiaoming at Ping'an Securities.
Shanghai Electric Power Co Ltd's A shares debuted on the Shanghai stock exchange yesterday, rising a lackluster 49.48 percent to 8.67 yuan (US$1.05) by midday from an IPO price of 5.80 yuan (70 US cents) due to poor market conditions.
It is not uncommon for new listings to double or triple on their first day of trading, as IPO prices are often set artificially low to ensure smooth selling.
China's yuan ended two notches stronger versus the US dollar at 8.2766 yesterday, near the stronger end of its managed trading range.
Guo Shuqing, vice-governor of the , told a financial forum yesterday China would maintain the stability of the Renminbi exchange rate within a reasonable range.
"In the long run, we are exploring a more reasonable mechanism of formation of the Renminbi exchange rate so as to realize the convertibility of the capital account," Guo said.
"Liberalization is inevitable but we should take a cautious and steady approach."
(China Daily October 30, 2003)
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