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Banks lead Shanghai index lower on growth concern
By Lydia Chen |
June 9, 2011, Thursday
|
Online Edition
Online Edition
SHANGHAI shares fell for the first time in four days, erasing gains earned in previous rallies as a selloff in financial plays weighed on the index and a thin volume indicated a bearish outlook.
The Shanghai Composite Index shed 1.71 percent to 2,703.34. Turnover added slightly to 95.13 billion yuan (US$14.68 billion).
The drop came amid a plunge in B-share market today. The Shanghai B share market dived 7.9 percent to 256.91.
Despite banks largely trading at valuations well below their historical levels, investors are still dumping the shares in heavy volume in expectations for further weakness.
Chinese banks racked up losses in recent weeks after a Reuters report revealed a plan to clean up local government debt, which will pose risks for lenders. The sector is also hurt by concerns over further tightening, fundraising to satisfy capital adequacy requirements, and overhangs from the expiry of lock-up periods for institutional investors of some banks.
Industrial & Commercial Bank of China was down 1.13 percent to 4.37 yuan. China Pacific Insurance Group lost 2.13 percent to 21.15 yuan.
Cement makers were another sector that suffered a big loss today as a report by CITIC Kingston Securities said large construction projects designed in the country's latest five-year plan are not expected to start soon, which will reduce demands for concrete materials.
Huaxin Cement Co skipped 9.45 percent to 21.37 yuan.
Zhang Xiang, an analyst with Guodu Securities, said any possible rebound in the market was only going to be limited because of multiple concerns about the country's economy, inflation and company profit growth.
"The inflation pressure is not likely to ease, which means tightening will still be the main theme," Zhang said. "Whether the affordable housing projects can give a push to the economy is still in question while investors need time to determine whether companies profits are growing."
Meanwhile, Zhang Min, an analyst with Galaxy Securities, blamed the plunge in B share market on tight liquidity in the market while concerns on whether the dollar-denominated market will be overshadowed by the upcoming launch of Shanghai's international board.
The Shanghai Composite Index shed 1.71 percent to 2,703.34. Turnover added slightly to 95.13 billion yuan (US$14.68 billion).
The drop came amid a plunge in B-share market today. The Shanghai B share market dived 7.9 percent to 256.91.
Despite banks largely trading at valuations well below their historical levels, investors are still dumping the shares in heavy volume in expectations for further weakness.
Chinese banks racked up losses in recent weeks after a Reuters report revealed a plan to clean up local government debt, which will pose risks for lenders. The sector is also hurt by concerns over further tightening, fundraising to satisfy capital adequacy requirements, and overhangs from the expiry of lock-up periods for institutional investors of some banks.
Industrial & Commercial Bank of China was down 1.13 percent to 4.37 yuan. China Pacific Insurance Group lost 2.13 percent to 21.15 yuan.
Cement makers were another sector that suffered a big loss today as a report by CITIC Kingston Securities said large construction projects designed in the country's latest five-year plan are not expected to start soon, which will reduce demands for concrete materials.
Huaxin Cement Co skipped 9.45 percent to 21.37 yuan.
Zhang Xiang, an analyst with Guodu Securities, said any possible rebound in the market was only going to be limited because of multiple concerns about the country's economy, inflation and company profit growth.
"The inflation pressure is not likely to ease, which means tightening will still be the main theme," Zhang said. "Whether the affordable housing projects can give a push to the economy is still in question while investors need time to determine whether companies profits are growing."
Meanwhile, Zhang Min, an analyst with Galaxy Securities, blamed the plunge in B share market on tight liquidity in the market while concerns on whether the dollar-denominated market will be overshadowed by the upcoming launch of Shanghai's international board.
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