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Shanghai shares decline from 8-month high on liquidity concern
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SHANGHAI stocks retreated from an eight-month high today as concern over liquidity was reignited ahead of the initial public offering subscriptions of two companies this week.
The benchmark Shanghai Composite Index shed 0.14 percent, or 3.06 points, to 2,221.59. Turnover was 132.4 billion yuan (US$21.4 billion) at the trading close.
Changbai Mountain Tourism Co, which is set to sell new shares on the Shanghai Stock Exchange, will start the IPO subscription process tomorrow, followed by Kuaijishan Shaoxing Rice Wine Co that will open for subscription on Thursday. The two companies plan to raise 746 million yuan in total.
Fu Xuejun, analyst with Huarong Securities, said the two companies are expected to lock more than 200 billion yuan of funds in subscriptions as chasing new shares has proved to be profitable in this round of IPOs.
A bout of profit taking also dented the market before the release of key economic data for July including industrial production, fixed-asset investment and retail sales tomorrow.
The A-share market has been on the rise in recent weeks amid an improving economy, but doubts over the sustainability of recovery remains after July trade and inflation data gave a mixed picture of economy.
Jiang Chao, analyst with Haitong Securities, said the government is scaling down mini stimulus, which has been the key driver behind economic rebound, as data released yesterday showed growth of China’s fiscal spending slowed to 9.6 percent in July, a sharp drop from a 26.1 percent surge in June and 24.6 percent in May.
Brokerages paced the decline of financial counters after surging yesterday amid enthusiasm over the pilot program that will allow cross-market stock investment between the Shanghai and Hong Kong bourses.
CITIC Securities, China’s largest broker by assets, sank 0.97 percent to 13.23 yuan. China Merchants Securities slipped 0.54 percent to 11.14 yuan.
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