Chinese shares were mixed on Tuesday, with the weakness of banking and steel shares being cancelled out by robust energy stocks.
The benchmark Shanghai Composite Index, which covers both A and B shares, rose 0.07 percent to close at a new high of 5,425.21 points, but the Shenzhen Component Index for the smaller bourse was down 0.96 percent to 18,316.42 points.
The combined turnover reached around 262 billion yuan (US$34.8 billion), higher than the 256 billion yuan of the previous trading day.
The two bourses opened strongly following the gains made during the previous trading day, but share prices declined when the value of the financial and property heavyweights began to drop.
The Industrial and Commercial Bank of China, the nation's largest commercial bank, nudged down 0.15 percent to 6.53 yuan, Huaxia Bank, which led the charge last week, fell 3.72 percent to 22.00 yuan and China Merchants Bank, which helped boost the index at the end of last month, continued to fall, sliding 1.95 percent to 34.69 yuan.
Analysts from Galaxy Securities said the decline of bank share prices were "normal technical corrections", as the average price-to-earnings ratio is approaching 30 and the share prices need to be revalued.
Other analysts believe the upcoming initial public offerings have tempered investors' enthusiasm in the short-term.
"Now that more investors have more options to invest in because of the upcoming bank IPOs, they are liable to regard China's bank stocks as overvalued," Zhang Gang, a strategist at Central China Securities, told Associated Press.
Subscriptions for the A-share IPO of the China Construction Bank on Tuesday amounted to 2.26 trillion yuan, a record high for China's capital markets.
Hong Kong-listed China Shenhua, the country's largest listed coal producer, on Monday got the green light from China Securities Regulatory Commission for its A-share IPO application.
Qin Hong, an analyst from Bohai Investment, said these IPOs signal a continuous bullish trend for the stock market in the long run.
Vanke Group, China's flagship property developer, was down 3.85 percent to 30.70 yuan.
Steel stocks, which boosted the index on the previous trading day, led the downward trend on Tuesday as investors began to take profits.
Shougang, a major Chinese steel company, which rocketed 9.96 percent to 10.05 yuan on Monday, fell 2.89 percent to 9.76 yuan.
Baosteel, the nation's biggest steel producer, which rose 3.23 percent to stand at 20.44 yuan on Monday, declined 4.79 percent to 19.46 yuan.
But energy stocks offset the losses from the steel companies.
Zhengzhou Coal Industry Electric Power rose 8.92 percent to 16.98 yuan and Huaneng Power International, one of the nation's power giants, climbed 5.66 percent to 18.49 yuan.
Many investors believe the Chinese stock market will remain stable at least until after the 17th National Congress of the Communist Party of China, which is scheduled to convene in Beijing on October 15.
(Xinhua News Agency September 19, 2007)
