Shanghai's key stock index fell this morning as blue chips in the banking and property sectors declined.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, was down 0.81 percent, or 44.48 points, to 5,453.42 at 11:30am today.

 

Winners in the Shanghai market outnumbered losers 410 to 364 and 76 were unchanged.

 

The Shenzhen Composite Index, which covers the smaller mainland stock market, inched up 0.28 percent, or 4.33 points, to 1,574.73.

 

Banks and property developers performed poorly despite the yuan hitting a new high against the US dollar today.

 

China Vanke, the nation's biggest real estate developer, shed 2.02 percent, or 0.63 yuan (9 US cents), to 30.60 yuan while Industrial Bank declined 2.53 percent, or 1.55 yuan, to 59.71 yuan.

 

But China Citic Bank Corp gained 1.60 percent, or 0.17 yuan, to 10.77 yuan. The bank said its net income last year may have more than doubled from a year earlier, boosted by faster income growth from fees and interest.

 

The yuan rose to its highest since a dollar link ended more than two years ago as US Treasury Undersecretary David McCormick called on China for a faster currency appreciation to help narrow the two nations' trade gap.

 

After a speech yesterday at the University of California in San Diego, McCormick referred to a 14 percent gain in the yuan since July 2005 as "some progress.''

 

The yuan rose 0.1 percent to 7.2446 against the dollar as of 10:25 am today in Shanghai from 7.2516 yesterday.

 

Brokerages declined this morning.

 

Citic Securities Co, the nation's biggest brokerage, lost 2.26 percent, or 2.21 yuan, to 95.40 yuan. Haitong Securities Co, the second-largest, was down 2.17 percent, or 1.28 yuan, to 57.79 yuan.

 

China's securities regulator will encourage more companies to sell shares on domestic stock markets and increase the proportion of free floats for traded companies, Chairman Shang Fulin said on Saturday at a conference in Beijing.

 

A fall among oil-related shares, which are key heavyweights in the market, also contributed to the loss in the early session today.

 

Sinopec, the country's largest oil refiner, skidded 1.75 percent, or 0.41 yuan, to 23 yuan while PetroChina, Asia's biggest oil producer, buckled 0.85 percent, or 0.26 yuan, to finish the session at 30.35 yuan.

 

But steel makers performed well this morning on a report that stainless-steel production will expand as much as eight times faster this year.

 

Baoshan Iron & Steel, China's biggest steel maker, rose 1.49 percent, or 0.29 yuan, to 19.70 yuan. Wuhan Iron & Steel Co, China's third-biggest steel maker by market value, climbed 2.82 percent, or 0.64 yuan, to 23.35 yuan.

 

Growth in stainless-steel production may be as fast as 8.6 percent as mills replenish stockpiles, with almost half the 2.5 million-metric-ton increase from China, research group CRU said last Friday. Last year's estimate of one percent growth will be revised in March, CRU said.

 

(Shanghai Daily January 15, 2008)