Friday, March 07, 2008

China stocks sink 2.1 pct as Ping An holders vote

China's stock market fell sharply on Wednesday, dragged down by heavy industrial shares, as shareholders in Ping An Insurance met to vote on its proposal to make one of the world's largest equity issues.

Many analysts said the result of the vote was too close to call, but market opinion was swinging towards the view that the proposal would probably pass after Ping An conducted a strenuous lobbying campaign with major shareholders.

Investors worry about the battered stock market's ability to absorb the huge equity issue, which could total some 120 billion yuan ($16.9 billion), and that passage of Ping An's proposal could encourage other large companies to make big cash calls.

The Shanghai Composite Index <.SSEC> ended the morning down 2.14 percent at 4,242.626 points, only marginally off the day's low of 4,241.600, after sliding 2.32 percent on Tuesday.

Losing stocks in Shanghai far outnumbered gainers by 695 to 184. Turnover in Shanghai A shares shrank to a moderate 57.2 billion yuan from Tuesday morning's 72.8 billion.

Wuhan Steel <> lost 7.26 percent to 18.00 yuan, while oil refiner Sinopec <> tumbled 4.82 percent to 16.00 yuan. China State Shipbuilding <> slid 7.04 percent to 178.50 yuan.

"Ping An's pressure on the overall market lingers -- on Tuesday it triggered selling in banks, and that has spread today to other shares," said Wu Nan, analyst at Xiangcai Securities.

Shares in Ping An <> itself, which have plunged to 67.10 yuan from above 100 yuan in mid-January, were suspended on Wednesday.

($1 = 7.11 yuan)

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