Chinese share prices fell sharply Monday continuing last week's
decline, with financial and property stocks leading the slump.
Analysts said investors dumped banking and property shares in
anticipation of further economic cooling measures being released by
the central government.
The government said at the conclusion of the 2007 Central
Economic Work Conference on Dec. 5 that it will adopt a "tight"
monetary policy in 2008, a shift from a prudent approach it has
followed for the last ten years. Since then, the government has
imposed stronger curbs on lending and mortgage loans.
The benchmark Shanghai Composite Index, which covers both A and
B shares, plunged 131.15 points, or 2.62 percent, to finish at
4,876.76.
The Shenzhen Component Index on the smaller Shenzhen Stock
Exchange fell 364.53 points, or 2.21 percent, to 16,118.97.
The Hushen 300 Index, which accounts for 60 percent of the
nation's stock market value, dropped 120.36 points, or 2.42
percent, to 4,857.29.
Gainers led losers by 457 to 310 in Shanghai and 367 to 199 in
Shenzhen. The combined turnover of the Shanghai and Shenzhen
bourses expanded to 151.56 billion yuan from 122.41 in the previous
session.
China's share price slump echoed losses in Hong Hong. The
benchmark Hang Seng Index fell 967.06 points, or 3.51 percent, to
close at 26,596.58 on concerns that the Federal Reserve will have
limited room to cut interest rates after the stronger-than-expected
inflation data.
Banks and property developers led the decline. Industrial Bank
tumbled 7.67 percent to 46.86 yuan. Heavyweights Industrial and
Commercial Bank of China was down 4.01 percent to 7.67 yuan and
Bank of China was down 3.24 percent to 6.27 yuan.
China Vanke, the nation's largest listed property developer,
plunged 9.52 percent to 27.10 yuan. Poly Real Estate was down 6.82
percent to 56.85 yuan.
Qin Hong, an analyst at Bohai Investment, said investors have
realized that the profit growth of property developers will slow
down with the tightening measures.
Steel shares were also among the heavy losers. Baoshan Iron and
Steel, the nation's largest iron producer, fell 3.02 percent to
15.74 yuan.
Oil giant PetroChina, which accounts for nearly a quarter of the
total weight of the benchmark index, dropped 1.83 percent to 29.99
yuan.
Rises in consumer stocks, however, cushioned the slump. They
posted strong gains for two consecutive days as the New Year
holiday and Spring Festival, approach.
Beijing Xidan Department Store rose 4.74 percent to 13.70 yuan
following its rise of the ten-percent daily limit on Friday. Suning
Appliance Co., China's second largest appliance retail chain,
climbed 5.72 percent to 68.35 yuan.
(Xinhua News Agency December 17, 2007)
