Shares end below 5,000 as market still corrects

SHARES in Shanghai ended below 5,000 points yesterday as the market continued to correct.

The benchmark Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, ended at 4,958.04 points for a loss of 2.7 percent, or 137.5 points, from Wednesday.

Only 83 shares advanced while 818 stocks lost and 66 firms were unchanged.

Turnover in Shanghai fell to 105 billion yuan (US$14.2 billion), against 112.9 billion yuan the day before.

The Shenzhen Composite Index, which tracks the nation's smaller bourse, dropped 3.72 percent to 1,302.25 points.

Zhou Xiaochuan, China's central bank governor, said during the China-US Strategic Economic Dialogue on Wednesday that surging consumer prices and US interest rate cuts would have "considerable influence" over China's monetary policy.

"The remarks sparked speculation that another interest rate rise could be on the way," said Zhang Qi, an analyst with Haitong Securities Co.

On Tuesday, the authorities announced a stringent definition of a second and multi-mortgage, which hit shares of banks and property developers.

Yesterday was the fourth straight day of losses for bank shares.

Industrial Bank Co Ltd fell 2.83 percent to 49.87 yuan while Shanghai Pudong Development Bank dropped 2.92 percent to 48.47 yuan.

"Investors had better choose less risky small-caps or wait to see the overall market performance," Zhang said.

China's economy may grow more slowly next year on the government's tighter monetary policies, the Asian Development Bank said yesterday.

Given that the investment surge continues unabated and the stock index keeps rising, a further monetary tightening is widely expected before the end of the year, said the report.