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Corporate profit fears depress market

SHANGHAI'S key stock index fell today amid growing concerns financial figures to be released soon would show worsening corporate performances.

The Shanghai Composite Index dropped 0.24 percent, or 4.51 points, to 1900.35 points.

Gainers outnumbered losers 630 to 286 while 43 remained unchanged. Turnover in the local market stood at 59.5 billion yuan (US$8.75 billion).

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.49 percent, or 2.87 points, to 588.72 points.

The benchmark index rose at midday close after Prime Minister Wen Jiabao said macro-economic figures for December would be better than expected over the weekend.

Premier Wen also said over the weekend the country plans to introduce more measures to boost economic growth.

Meanwhile corporates will announce annual reports from Thursday. According to the financial Website, about half of the 597 companies, which have forecast their earnings for the last year, have booked an annual loss. Analysts said corporate profitability would stay on the downward track until at least the first quarter.

China Eastern Airlines Corp fell 0.89 percent to 4.44 yuan after it posted hedging losses and warned of significant losses in earnings last year. China Eastern, the nation's third-largest carrier by fleet size, said it lost about 6.2 billion yuan on fuel hedging contracts last year. Fair-value hedging losses totaled US$14.2 million in December alone.

Developers showed a mixed performance after China's house prices dropped 0.4 percent in December from a year earlier, the first decline on record. The decrease in prices across 70 major cities follows a 0.5 percent increase in November, the National Development and Reform Commission said last Friday after the market closed.

China Vanke Co, the nation's biggest listed property developer, fell 1.16 percent to 6.81 yuan. Poly Real Estate Group Co, the second-largest, retreated 1.84 percent to 16.33 yuan.

Elsewhere, China Petroleum & Chemical Corp, Asia's biggest oil refiner said its unit and a company based in the central province of Hubei had received state approval for a 423 million-yuan ethanol plant. Sinopec lost 0.7 percent to 7.09 yuan.

China Shenhua Energy Co, the nation's largest coal producer, reportedly plans to bid for a stake in a coal unit Rio Tinto Group is putting up for sale. The stock edged down 1.49 percent to 19.17 yuan.

Gree Electric Appliances Inc, China's largest maker of home air-conditioners, gained 0.38 percent to 18.28 yuan after it saying its profit probably rose 50 percent in 2008 from a year earlier on lower costs.

Huadian Power International Corp, the unit of China's fourth-biggest power generator said it expects to post a loss in 2008 as higher coal prices ate gains from a 27 percent increase in electricity generation. The stock declined 1.85 percent to 3.85 yuan.


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