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Shanghai index falls 1.8% to a five-month low
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Shanghai stocks tumbled today, sending the key index to nearly a five-month low, amid fears that a slew of initial public offerings this month may drain liquidity from the market and China’s economy is cooling after data showed the service sector expanded at the lowest pace in 28 months.
The benchmark Shanghai Composite Index slumped 1.8 percent, or 37.43 points, to 2,045.71. Turnover was 72.9 billion yuan (US$12 billion) at the trading close.
Eleven companies said yesterday that they have received regulatory approval to float shares on the domestic markets, bringing the total number of companies allowed to launch IPOs to 27.
The China Securities Regulatory Commission said earlier that around 50 companies will be ready for IPOs in January.
“At the current pace of approvals, it is quite possible that 50 companies will get listed this month,” Zhu Haibin, analyst with Essence Securities, said in a note today.
“The first batch of IPOs is estimated to raise a total of 40 billion yuan. This will add pressure on market liquidity in the short term,” Zhu said.
HSBC China Service Purchasing Managers Index (PMI), a gauge of operating conditions in private and export-oriented service companies, fell again in December to 50.9, HSBC Holdings Plc and Markit Economics reported today.
The reading was down from 52.5 in November and the lowest since August 2011. A reading of 50 or higher indicates the activity is expanding.
The figure is in line with the poor data about China’s manufacturing sector issued last week, adding new proof that the world’s second-largest economy is losing momentum.
Real-estate developers plunged. Poly Real Estate Group Co Ltd, China’s second-largest home builder, lost 5.7 percent to 7.65 yuan. Gemdale Corporation declined 4.8 percent to 6.01 yuan. China Enterprise Co Ltd slumped 8 percent to 6.15 yuan.
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