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Stock index falters on IPO fears

SHANGHAI'S key stock index continued last week's downward trend in the morning session among fears that a resumption of initial public offerings will bring uncertainty to the market.

The benchmark Shanghai Composite Index was down 1.23 percent, or 31.88 points, to close at 2,565.72 points. Losers outnumbered gainers 703 to 148 while 57 remained unchanged. Turnover was 60.5 billion yuan (US$8.8 billion).

The Shenzhen Composite Index, which tracks the smaller domestic market, lost 1.40 percent to close at 864.30 points.

China has unveiled a new pricing mechanism that favors minority investors who buy into IPOs, paving the way for the resumption of new stock sales on the mainland after a nine-month hiatus.

A total of 32 companies have received approval from the China Securities Regulatory Commission and more than 14.3 billion shares will be sold after the IPOs restart.

PetroChina said yesterday it has signed an agreement to buy a 45.51-percent stake in Singapore Petroleum Co for US$1.02 billion in cash. The largest index component was down 1.17 percent to 12.71 yuan.

Banks showed mixed results. Bank of China lowered 0.85 percent to 3.50 yuan. Shanghai Pudong Development Bank edged up 0.04 percent to 24.81 yuan. China Merchants Bank Co, the nation's fifth-largest bank by market value, was down 0.36 percent to 16.59 yuan. Bank of Communications retreated 2.41 percent to 6.88 yuan.

Real estate developers bucked the downward trend. China Vanke Co, the largest listed domestic property developer, was up 1.14 percent to 9.76 yuan. China Merchants Property Development Co Ltd added 1.12 percent to 21.60 yuan.

Brokerages rose in the first half of trading as new IPO rules are expected to boost revenues for issuing companies. Haitong Securities advanced 4.08 percent to 14.03 yuan. Sinolink Securities rose 3.69 percent to 37.41 yuan. Guoyuan Securities climbed 3.60 percent to 16.97 yuan.

Shipping companies were among the losers. China Shipping Container Lines Co Ltd lost 1.72 percent to 3.99 yuan. China Cosco Holdings Co Ltd lost 2.33 percent to 12.15 yuan.


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