Shanghai shares suffer biggest fall since January
Print Edition
SHANGHAI shares suffered their biggest fall since January 19 after new offers shifted funds from existing equities amid investors’ worries about more market-cooling measures by the government.
The Shanghai Composite Index lost 4.06 percent to 4,298.71 points, falling below 4,300 for the first time in two weeks.
Initial public offerings of 25 companies are due to open for subscription before May 12 which, according to Guosen Securities, may freeze around 2.5 trillion yuan (US$403 billion).
Datong Securities said liquidity tightened as investors removed funds from current stocks to pursue new shares, especially those blue chip owners that saw shares surge recently.
Electricity companies fell sharply after beneficial pricing policies made the sector top the market rise on Monday. Shanghai Electric Power Co tumbled by the daily 10 percent limit to 26.16 yuan, China Yangtze Power Co dropped 9.52 percent to 12.74 yuan and Chongqing Fuling Electric Power Industrial Co lost 9.19 percent to 23.33 yuan.
China Petroleum and Chemical Corp fell 2.94 percent after parent company Sinopec Group announced on Monday that Wang Yupu was to be its new chairman.
Sectors including cement, coal and wine led the decline in the market yesterday after an HSBC survey showed that China’s factory activities contracted at their fastest rate in a year in April, suggesting continued downward pressure on the country’s economy.
The HSBC/Markit purchasing managers’ index for China’s manufacturing sector in April stood at 48.9, compared with the market forecast of 49.4.
The Shanghai property index slid from a record high, losing 7.4 percent and paring a rally over the past month to 23 percent. Shanghai Jinfeng Investment Co slumped by the daily 10 percent limit to 35.10 yuan, while China Fortune Land Co dropped 8.16 percent to 30.94 yuan.
The 113 percent rally over the past year at the Shanghai exchange prompted the government and media to warn investors of market risks and some brokerages to raise margin-trading requirements. Huatai Securities and Tebon Securities lifted requirements for margin trading and short selling to control risks, the Shanghai Securities News reported.
The People’s Daily said on its website on Monday that the bull market didn’t simply mean one-way gains and that there would be twists and turns.
Many investors in the Chinese stock market have bought shares through margin financing or leverage so a small correction may hurt them, it said.
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