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Shanghai shares drop as delisting concerns batter confidence
By Ye Zhen |
July 30, 2012, Monday
|
Online Edition
Online Edition
SHANGHAI equity market plunged to the lowest level since March 2009 after the Shanghai Stock Exchange unveiled a draft rule to narrow price fluctuation limits for shares with delisting risks, fanning concern more companies may face delisting.
The benchmark Shanghai Composite Index retreated 0.89 percent to settle at 2,109.91 points. Turnover was 42.4 billion yuan (US$6.7 billion) by the trading close.
The Shanghai Stock Exchange announced on its website last Friday that it proposed to lower the upper limit on daily price swings for both ST and *ST shares from 5 percent to 1 percent, and keep the lower limit at 5 percent.
Under the listing rules, listed companies operating at losses for two straight years will be marked "under special treatment", or "ST shares", and those operating at losses for three straight years will be marked "* ST shares". The latter will be delisted if it fails to return to profit or conduct restructuring in half a year.
The draft guideline is good for the healthy development of China's capital market in the medium and long term, but it will give ST shares a heavy blow in the short term, said Liu Ying at Huatai Securities today.
Data showed 107 out of 168 ST shares listed on both Shanghai and Shenzhen markets fell by the day limit of 5 percent today.
Insurers posted a weak run on speculation damages claims related to Beijing floods on July 21 will hurt insurers' earnings. China Life Insurance, the country's biggest insurer, lost 2.7 percent to 18.39 yuan. Ping An Insurance Co, China's second largest insurer, dropped 2 percent to 43.61 yuan. China Pacific Insurance (Group) Co sank 3.5 percent to 21.34 yuan.
Brokerages also fell. Citic Securities, the biggest listed brokerage, dived 1.2 percnt to 12.06 yuan.
Founder Securities Co lost 2.4 percent to 4.54 yuan. Sinolink Securities Co plunged 4.4 percent to 11.76 yuan.
The benchmark Shanghai Composite Index retreated 0.89 percent to settle at 2,109.91 points. Turnover was 42.4 billion yuan (US$6.7 billion) by the trading close.
The Shanghai Stock Exchange announced on its website last Friday that it proposed to lower the upper limit on daily price swings for both ST and *ST shares from 5 percent to 1 percent, and keep the lower limit at 5 percent.
Under the listing rules, listed companies operating at losses for two straight years will be marked "under special treatment", or "ST shares", and those operating at losses for three straight years will be marked "* ST shares". The latter will be delisted if it fails to return to profit or conduct restructuring in half a year.
The draft guideline is good for the healthy development of China's capital market in the medium and long term, but it will give ST shares a heavy blow in the short term, said Liu Ying at Huatai Securities today.
Data showed 107 out of 168 ST shares listed on both Shanghai and Shenzhen markets fell by the day limit of 5 percent today.
Insurers posted a weak run on speculation damages claims related to Beijing floods on July 21 will hurt insurers' earnings. China Life Insurance, the country's biggest insurer, lost 2.7 percent to 18.39 yuan. Ping An Insurance Co, China's second largest insurer, dropped 2 percent to 43.61 yuan. China Pacific Insurance (Group) Co sank 3.5 percent to 21.34 yuan.
Brokerages also fell. Citic Securities, the biggest listed brokerage, dived 1.2 percnt to 12.06 yuan.
Founder Securities Co lost 2.4 percent to 4.54 yuan. Sinolink Securities Co plunged 4.4 percent to 11.76 yuan.
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