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December 10, 2009

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Home » Business » Finance

Stocks extend losses to drop 1.7%

SHANGHAI'S benchmark stock index extended losses yesterday to close 1.73 percent lower, led by lenders and property developers on concerns of a capital shortage and the central government's initiatives to curb rising housing prices.

The Shanghai Composite Index dropped 57.1 points to close at 3,239.57. Turnover shrank to 136.3 billion yuan (US$20.1 billion) from 162.7 billion yuan.

Shang Fulin, chairman of the China Securities Regulatory Commission, said recently the capital market should play its full role in serving the economy.

"Shang's comment indicated the regulator's support to raise capital from the stock market but his remark raised concerns that more fund raising activities are to come and pose pressure on market liquidity," said Shi Bangjin, an analyst with Shenzhen Guocheng Investment Consultants Co.

Shang's comment coincided with Li Jiange, deputy board director of the Central Huijin Investment Co, who said banks would not be allowed to cut dividends to replenish capital and that market tools were preferred in helping lenders to raise their capital adequacy ratios.

The Industrial and Commercial Bank of China retreated 1.5 percent to 5.22 yuan while China Construction Bank eased 1.3 percent to 6 yuan and the Bank of China fell 2.1 percent to 4.14 yuan. China Merchants Bank slid 2.5 percent to 17.37 yuan.

Real estate developers fell after the chairman of the National Development and Reform Commission, Zhang Ping, said the agency will curb speculative home purchases and increase the supply of low-cost homes.

Poly Real Estate Group fell 3 percent to 25.19 yuan and Gemdale Corp sank 3.4 percent to 15.8 yuan. Shanghai Lujiazui Finance and Trade Zone Development fell 1.9 percent to 27.46 yuan.

Subscriptions to the share sales of a second batch of eight new start-ups that will list on ChiNext are expected to start next Wednesday.


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