Wide sell-off pulls index down by noon

A wide sell-off of stocks in Shanghai dragged the key index down to near 5,000 this morning.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, shed 2.32 percent, or 120.18 points, to 5,060.33 at 11:30am. It opened at 5,188.79 at 9:30am.

Losers in the Shanghai market outnumbered winners 498 to 280 and 72 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, fell 1.16 percent, or 17.68 points, to 1,500.59.

Ping An Insurance (Group) Co headed for a five-month low in the morning session after the company said it plans to issue a maximum of 1.2 billion shares on the mainland.

China's second-biggest insurer tumbled 6.99 percent, or 6.86 yuan (92 US cents), to 92.35 yuan, and looks set to close at its lowest since August 17.

The new shares, representing about 16.3 percent of Ping An's total issued share capital, will be offered to institutional and individual investors, the company said in a statement to the Hong Kong stock exchange on Friday.

China Pacific Insurance (Group) Co, the nation's third-largest insurer, also lost 2.19 percent, or 2.33 yuan, to finish the session at 42.59 yuan. The company reported 50.7 billion yuan of life-insurance premiums last year.

Banks and real estate companies were weak this morning with investors wary that more tight monetary policies may follow the release of economic-growth data on Thursday.

Guangzhou-based Poly Real Estate Co tumbled 4.03 percent, or 2.8 yuan, to 66.7 yuan and Shanghai Pudong Development Bank Co, the Chinese partner of Citigroup Inc, dropped 3.77 percent, or 2.15 yuan, to 54.9 yuan.

The National Bureau of Statistics will release gross domestic product for the fourth quarter on Thursday. Bloomberg News tipped the figures will show GDP growth probably slowed to 11.3 percent for the quarter, easing from 11.5 percent in the third quarter. The deceleration will hurt corporate profits.
Among airlines, China Eastern, the nation's third-largest carrier by fleet size, edged up 0.94 percent, or 0.19 yuan, to 20.32 yuan.

Air China's parent has bid for a stake in rival China Eastern, after Singapore Airlines Ltd's HK$3.80 (49 cents) a share offer was rejected.

China National Aviation Holding Co, the parent, proposed to become an "alliance partner'' with China Eastern, China National Aviation said on Saturday. Details of the offer will be announced tomorrow, it said.

But China Eastern Airlines Corp said it "doubted the sincerity'' of the offer from China National Aviation to buy a stake for at least HK$14.9 billion, renewing hostility to a deal with its larger rival.

"It's informal and doesn't conform to legal procedures,'' China Eastern said in an e-mailed statement late yesterday. China National Aviation offered to buy as much as 30 percent of the carrier for cash through a Hong Kong-based unit, Shanghai-based China Eastern said in a stock exchange statement today.

Air China was suspended from trading in Shanghai today. But the stock lost 10 percent to HK$8.89 as of 11:03am today in Hong Kong, which was the most in four months after the carrier reiterated its opposition to the deal.