Chinese shares decline

China's main share index lost 0.93 percent on Tuesday as investors took profits in large-caps on the eve of the debut of Bank of China, Shanghai's biggest-ever listing. The benchmark Shanghai Composite Index held steady in the morning before falling to close at 1,681.547 points.
Turnover in Shanghai A-shares was a moderately active 32.6 billion yuan ($4.08 billion), up from 28.3 billion on Monday. "Investors have become more cautious and want to see what happens after Bank of China's IPO," said Chen Jinren, an analyst with Huatai Securities. "While the market has gained a lot in the last two weeks, trading volumes haven't been that high." Shares were also pressured by selling after the index on Monday surged 1.5 percent to a 26-month high just above 1,700 points, a profit-taking target for some investors.
"Technically, the modest trading volume since the rebound started in mid-June cannot support the overall market extending its rally," said Zhang Yong, analyst with Shanghai Securities. Large caps lost ground on Tuesday as investors took profits from the Shanghai index's more than 10 percent rise in the past three weeks.
Sinopec, which will be replaced by Bank of China as Shanghai's largest stock, fell 3.19 percent to 6.07 yuan. Top Shanghai-listed lender China Merchants Bank Co Ltd closed 0.75 percent lower to 7.90 yuan, while smaller rival Minsheng Banking Corp lost 1.32 percent to end at 4.49 yuan.
Bank of China appears certain to soar on Wednesday. A Reuters poll of 10 local analysts predicted last week that shares in the bank would trade between 3.50 and 4.50 yuan on their first day, compared with a domestic initial public offer price of 3.08 yuan. Some traders were talking on Tuesday of an even bigger rise.
Because of Bank of China's large weighting, it is expected to produce a gain of around 50 points in the Shanghai index. But other stocks could suffer as money is diverted away from them, and given the pressure on liquidity from other IPOs expected in coming weeks and months.
"The index will definitely gain a lot tomorrow, but it's very hard to tell what will happen after that," said Chen. Several firms in the metals sector climbed on Tuesday as copper prices rose.
Jiangxi Copper Co Ltd, China's largest copper producer, rose 1.31 percent to 12.38 yuan, even as it said it would shut one of its four mines temporarily due to rain damage. Major gold miner Zhongjin Gold Co Ltd climbed 9.9 percent to 22.80 yuan.