Chinese shares ended down 1.73 percent on Monday amid investor caution in the run-up to ICBC's listing, but index heavyweight Sinopec Corp bucked the trend, surging 2.74 percent. The Shanghai composite index finished at 1,759.394 points. The fall came after the index hit an intra-day peak of 1,801.334 points, its highest level since September, 2001.
Turnover in Shanghai A-shares was a moderately active 24.3 billion yuan ($3.1 billion), versus 23.3 billion yuan on Friday. The index would have fallen further if not for the rise in Sinopec, which jumped to 5.63 yuan, the highest closing level since it resumed trading on October 10 after reform of its state shareholding structure. Turnover was more than double last week's levels.
Sinopec's share prices plunged over 21 percent on the first day it resumed trading after the company compensated its A-share holders with 2.8 bonus shares for every 10 shares held.
Analysts had expected the share price to rebound 10-15 percent after that. Gui Haoming, an analyst with Shenyin & Wanguo Securities, said the rise might also have something to do with global oil prices, which slid earlier on Monday. Some traders noted that Sinopec units had just passed their own state share reform plans.
In addition, China Resources Enterprise said on Thursday that it was in talks to sell its chemicals and gas distribution business in Hong Kong, and the market believes Sinopec, Asia's largest refiner, is a likely buyer. ICBC, which is expected to list on Friday, said on Monday it was exercising an over-allotment option for its domestic initial public offering, raising as much as 46.644 billion yuan.
"Such a huge IPO naturally led to a decline of the index, though it came later than expected," said Shenyin & Wanguo's Gui. "Sentiment was strong last week on investor optimism, but objectively, the market was still pressured by the large cash call," he added.
The IPO especially drained money from banking stocks. China Merchants Bank closed down 2.1 percent at 10.28 yuan, while Minsheng Bank dropped 4.27 percent to 5.61 yuan. Huatai Securities analyst Chen Jinren predicted that the index would fall to near 1,750 points this week ahead of ICBC's listing. The 1,750 point area, roughly the mid-September high, is technical support.
Property shares were generally soft, with Shanghai-based Lujiazui Finance and Trade Development Zone Co Ltd falling 2.07 percent to 7.56 yuan. Beijing said last week that the government would take further measures to curb speculation in the real estate market.
Investors believe Shanghai's property market will be particularly vulnerable because of the recent Shanghai corruption scandal. A Beijing-backed Hong Kong newspaper said on Monday that over 50 people had been detained. TCL Corp fell 2.17 percent to 2.25 yuan on Monday, after the home-grown television and cellphone producer said on Saturday it still expected to post a loss for the full year, though it had returned to the black in the third quarter.
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