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Property firms sink key index

SHANGHAI'S key stock index dropped more than 1.5 percent yesterday as investors shied away from overvalued shares in the property sector.

The benchmark Shanghai Composite Index dropped 1.54 percent, or 40.79 points, to close at 2,610.62, after hitting an intraday low of 2,598.87 points. Turnover rose to 138.84 billion yuan (US$20.42 billion) yesterday from 137.73 billion yuan on Wednesday.

"The barometer faces more difficulty in moving upward," Galaxy Securities Co wrote in a research note. "Investors are eager to sell off as they regard some sectors as overvalued. Plus they are somewhat cautious due to the uncertain macro-economic outlook."

Property developers tumbled as analysts said the sector is overvalued due to excessive optimism over the recovery in the real estate market. Gemdale Corp, a Chinese partner of ING Group NV, lost 3.5 percent to 16.27 yuan. Poly Real Estate Group, China's second-largest developer by market value, slid 3.82 percent to 21.89 yuan. Shanghai-based Shimao Property Co eased 0.97 percent to close at 14.22 yuan. Shanghai Lujiazui Finance and Trade Zone dipped 1.33 percent to 24.51 yuan.

Coal producers were also among the losers. China Shenhua Energy Co, Asia's largest coal producer, dropped 4.99 percent to 26.64 yuan. Datong Coal Industry Co, China's second-largest coal miner by capacity, fell 5.32 percent to 36.85 yuan. Pindingshan Tian'an Coal Mining Co lost 2.54 percent to 35.37 yuan.

Bucking the falling trend, China Yangtze Power Co added 0.95 percent to 13.75 yuan. PetroChina, the index's biggest member, added 0.77 percent to finish at 13.17 yuan.


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