Index falls as banks, brokerages suffer
Print Edition
Shanghai shares fell for a second straight day yesterday, dragged down by banks and brokerages after China Merchants Bank announced plans to raise 35 billion yuan (US$5.7 billion) through rights offerings in both the A-share and H-share markets.
The benchmark Shanghai Composite Index dipped 0.47 percent to 2,057.46 points. The index ended the week with a 0.54 percent decline.
Merchants Bank lost 3.21 percent to 10.56 yuan after announcing its rights offerings which aim to increase the bank’s capital adequacy ratio. Ping An Bank dipped 3.01 percent to 10.62 yuan.
“We believe the possibility of other banks following suit is low, but market concerns over Merchants Bank’s refinancing will increase due to its low CAR level,” said Vivian Xue, an analyst with Shenyin and Wanguo Securities.
The bank’s CAR is expected to rise to 14.5 percent at the end of this year, up from 12.1 percent at the end of last year.
“The market will continue to face volatility as there seem to be no cross-board incentives in sight,” said Huatai Securities in a research note.
Everbright Securities Co, the brokerage blamed for causing a malfunction in the Shanghai market due to an erroneous trading system on August 16, ended the week with a loss of about 7 billion yuan in market value. Trading in its shares resumed yesterday following a suspension on Thursday afternoon, and they slumped 1.4 percent to 9.84 yuan.
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