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Shanghai index down 0.18% as lenders, developers wilt

By Ye Zhen | December 30, 2013, Monday | Online Edition

Shanghai stocks ended lower today as financial and property shares sank despite of the central government’s pledge to better protect small investors.

The key Shanghai Composite Index shed 0.18 percent, or 3.72 points, to 2,097.53. Daily turnover was 63 billion yuan (US$10.3 billion).

The State Council, China’s cabinet, on Friday announced new measures to increase protection of small investors, establish an investor classification system to bar novice investors from certain sectors, and introduce an insurance system to help companies avoid being delisted.

It also vowed to increase dividend payments and investors’ voting rights, establish an investor compensation system and crack down on market irregularities.

“The measures are very straightforward and practical. They are positive for restoring the market confidence,” Cao Xuefeng, analyst with Huarong Securities, said in a note today.

In 2004, the State Council also outlined nine measures to reform the country’s capital market, which gave the stock market a boost shortly afterwards.

But Cao said the short-term market performance is subject to economic data and the resumption of initial public offerings. “Interest rate liberalization and the scale of audited local government debt will depress the performance of financial shares,” he added.

China Minsheng Banking Corp Ltd lost 1.3 percent to 7.57 yuan. Bank of China Ltd fell 1.9 percent to 2.61 yuan. Bank of Communications Co Ltd skidded 2.3 percent to 3.80 yuan.

Property developers were also weak. Poly Real Estate, China’s second largest homebuilder, lost 1.6 percent to 8.03 yuan. Gree Real Estate Co Ltd fell 2.6 percent to 8.50 yuan.

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