China's shares dived 2.4 percent on Monday, setting yet another six-year closing low, as investors fled the market after Beijing launched a second attempt to sell some $300 billion in non-traded state-owned shares. The benchmark Shanghai composite index finished at 1,130.835 points, its lowest close since ending at 1,109.089 on May 19, 1999. Monday was the first trading session since Beijing unveiled a long-awaited new state-share sale programme on April 29.
Four Chinese companies announced Monday they would be the first to begin selling government-owned stocks, which collectively comprise roughly two-thirds the market's capitalisation and which have weighed on bourses for years.
Analysts had expected the news to hurt markets due to the sheer volume of stock up for sale, although they said the programme would take years at best to complete.
Huadian Power International Corp Ltd, China's third-largest listed electricity producer, plunged almost its 10 percent daily limit to 2.89 yuan.
And top Chinese steel maker Baoshan Iron and Steel Co Ltd had shed 3.6 percent to finish at 5.12 yuan, ranking itself the most active counter in Shanghai.
"The market's trend will hinge on specific reform schemes that the firms launch," said Lu Wei, a trader at East Asia Securities. "Generally speaking, the news is bearish for the bourses."
Beijing wants to sell state shares, a legacy of a centrally planned economy, to help fund an emaciated social welfare system and enhance transparency in corrupt markets, but stocks dived some 30 percent the last time regulators tried it, in 2001.
Comments
Comments are closed.