Thursday, March 27, 2008

Benchmark mainland index tumbles 4.5%

Chinese mainland stocks closed sharply lower on Monday and the Shanghai stocks posted its largest drop in nearly two months, triggered by the heavyweight blue chips.

The benchmark Shanghai Composite Index, which tracks both A shares and B shares on the Shanghai Stock Exchange, slipped 170.39 points, or 4.49%, to 3,626.19, which is the benchmark index' largest percentage loss since Jan. 28, 2008, when it slumped 7.19%.

The Shenzhen Component Index, covers the shares on the Shenzhen Stock Exchange, was down 620.72 points, or 4.52%, to 13,098.24.

The combined trading turnover on the two mainland stock markets shrunk to RMB 131.5 billion, down from RMB 143.8 on the previous trading day.

The slumps on the mainland stock markets could be attributed to the investors' weakening confidence, as they are cautious over the stock dumping by the major shareholders after the expiry of lock-up period for the non-tradable shares. Investors' sentiment was also weighed down by the new share supply.

Ping An<601318><2318>, China's second largest insurer by premium, maintained its weak performance after its announcement of domestic equity sale to raise about US$15 billion. Its shares dropped 9.81% to RMB 50.56, after falling 10% daily limit to the record 11-month low at RMB 50.45.

PetroChina<61857><857>, the country's largest oil refiner and the world's largest firm by market value, still remained weak. It lost 5.71% to RMB 19.83, the lowest level after domestic debut in November.

China Life<601628><2628>, the nation's largest insurer, shed 8.15% to RMB 28.97 after the news that it had injected US$300 million in Visa's IPO. The Industrial & Commercial Bank of China (ICBC)<601398><1398>, the country's largest lender, was down 3.16% to RMB 5.52.

The property stocks also went down. China Vanke<000002><200002>, the largest publicly traded Chinese real estate developer, was down 6.63% to RMB 22.80.

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