Chinese shares drop 1.04 percent

Chinese shares ended down 1.04 percent on Monday, with some bank stocks giving back gains in the afternoon on profit-taking, while Jiangxi Copper fell on sinking prices for the metal.
The benchmark Shanghai composite index finished at 1,863.765 points. It had drifted as low as 1,852.102 points in late trade, down 1.66 percent from Friday's close. Turnover in Shanghai A-shares was 27.5 billion yuan ($3.5 billion), lower than 34.5 billion on Friday, which was the highest level since June.
"The market lacked incentives for further rises as the banking and property sectors had gained too much in the previous sessions," said GUI Hominy, analyst at Shyness & Wang Securities. Industrial and Commercial Bank of China ended up 1.73 percent at a record closing high of 3.52 yuan. Trading volume in the stock was heavy at 463 million shares, making it the day's most active issue.
But the bank came off its intra-day peak of 3.59 yuan hit in which was a post-listing high. China Merchants Bank rose 2.2 percent to 12.53 yuan in the but ended unchanged at 12.26 yuan. The stock gained 15 percent last week. GUI expects the sector to correct for one or two days before it resumes rising on expectations of further yuan appreciation.
He sees the index's technical support at around 1,850 points, and said it was unlikely to rise much above 1,900 this week. But many analysts still believe that the index may hit 2,000 points by the end of 2006. They forecast that barring a major economic shock, earnings per share of listed companies this year will be at their highest level since 1995, and continue to rise strongly in the next one or two years.
The slope of the index's upturned channel from August indicates a rise to 2,000 by the end of this year is likely. Jiangxi Copper, China's top copper producer, dropped 6.66 percent to 10.51 yuan. Copper prices tumbled with most Shanghai copper futures contracts falling by daily downside limits as investors fretted over rising inventories.
China's biggest listed property developer China Vanke edged up 0.66 percent to 9.22 yuan, off a record intra-day high of 9.69 yuan hit. But smaller rival Shanghai Jinxing Investment Co soared 9.56 percent to 7.22 yuan, propelled by a technical rebound. The stock has dropped 31 percent in the past six weeks, amid a government corruption probe in Shanghai.