Index falls 3% to 4th weekly drop
By Joyce Pan |
August 29, 2009, Saturday
|
Print Edition
Print Edition
SHANGHAI'S key stock index plunged nearly 3 percent yesterday, sending the barometer to its fourth weekly decline, as the market faces mounting pressure from a capital shortage as more large initial public offerings and large-scale additional financing of listed companies take place.
The Shanghai Composite Index tumbled 2.91 percent, or 85.71 points, to close at 2,860.69, causing the index to lose 3.4 percent for the week. Turnover shrank to 133.76 billion yuan (US$19.67 billion) from 145.25 billion yuan.
"New share sales and issuing of additional shares have imposed great pressure on market liquidity while bank lending in August is expected to remain sluggish as July's, which could drag down stock prices further," said Feng Wei, an analyst at China Galaxy Securities Research. "Besides, the economic recovery is not as smooth as investors expect."
To date, 21 companies have raised 72.9 billion yuan from IPOs after it was allowed to resume in June, equivalent to 70 percent of the total amount in the mainland's two bourses for the whole of 2008, according to financial data provider Wind Info.
And there seems no end in sight as a total of nearly 80 billion yuan of financing plans have been announced so far.
For instance, a subsidiary of China Metallurgical Group Corp said it obtained regulatory approval to raise as much as 16.8 billion yuan in its IPO on the Shanghai bourse.
China Vanke Co, the nation's largest publicly listed real estate developer, said it plans to raise up to 11.2 billion yuan through a private placement.
Lenders were among the decliners yesterday. The Bank of China fell 1.76 percent to 3.9 yuan after saying it plans to slow credit growth in the second half. The Industrial and Commercial Bank of China, the nation's biggest lender, retreated 1.49 percent to 4.63 yuan. Shanghai Pudong Development Bank slid 5.75 percent to finish at 19 yuan.
The Shanghai Composite Index tumbled 2.91 percent, or 85.71 points, to close at 2,860.69, causing the index to lose 3.4 percent for the week. Turnover shrank to 133.76 billion yuan (US$19.67 billion) from 145.25 billion yuan.
"New share sales and issuing of additional shares have imposed great pressure on market liquidity while bank lending in August is expected to remain sluggish as July's, which could drag down stock prices further," said Feng Wei, an analyst at China Galaxy Securities Research. "Besides, the economic recovery is not as smooth as investors expect."
To date, 21 companies have raised 72.9 billion yuan from IPOs after it was allowed to resume in June, equivalent to 70 percent of the total amount in the mainland's two bourses for the whole of 2008, according to financial data provider Wind Info.
And there seems no end in sight as a total of nearly 80 billion yuan of financing plans have been announced so far.
For instance, a subsidiary of China Metallurgical Group Corp said it obtained regulatory approval to raise as much as 16.8 billion yuan in its IPO on the Shanghai bourse.
China Vanke Co, the nation's largest publicly listed real estate developer, said it plans to raise up to 11.2 billion yuan through a private placement.
Lenders were among the decliners yesterday. The Bank of China fell 1.76 percent to 3.9 yuan after saying it plans to slow credit growth in the second half. The Industrial and Commercial Bank of China, the nation's biggest lender, retreated 1.49 percent to 4.63 yuan. Shanghai Pudong Development Bank slid 5.75 percent to finish at 19 yuan.
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