Chinese shares slip

Chinese shares slipped on Tuesday after the benchmark index approached its record high, which has been strong resistance over the past two months. The Shanghai Composite Index was higher for most of the day but ended down 0.07 percent at 4,210.329 points, retreating rapidly in the final 45 minutes from an intra-day high of 4,284.829.
Losing Shanghai stocks outnumbered gainers by 514 to 342, and turnover in Shanghai A shares shrank to a moderate 139.6 billion yuan ($18.5 billion) from Monday's 152.3 billion as investors became more cautious with the market near its record intra-day high of 4,335.963, hit on May 29. The index had jumped 7.68 percent on Friday and Monday, buoyed by expectations for strong first-half corporate profits despite an interest rate hike last Friday.
The market plunged as much as 21 percent in the five days after it hit the May peak as the government raised the stock trading tax to deter speculation. A rebound near that high in June was followed by another sharp drop in subsequent days.
So given concern about high valuations and the possibility of more monetary tightening in coming months, the market is unlikely to make a sustained break above its record any time soon, many analysts said.
"The index will experience a slight correction after nearing its historical high point," said Tang Zhenbing, analyst at Hongyuan Securities. "Although major companies are expected to post good earnings reports, tightening economic policy will prevent the index from breaking records."
Real estate stocks were strong on Tuesday after Monday's official data showing continued rises in urban property prices in June. Vanke climbed 2.61 percent to 27.05 yuan.
Steel shares remained firm on growing optimism about steel prices and consolidation in the industry. Shares in Baoshan Iron & Steel, which jumped their 10 percent daily limit on Monday, gained a further 1.08 percent to 12.20 yuan, helping to limit the decline in the market index.
The Baosteel Group announced on Monday a strategic co-operation deal with Baotou Iron and Steel Group, helping accelerate expansion plans. Angang Steel surged 7.47 percent to 21.00 yuan, adding to Monday's 10 percent leap, after Goldman Sachs upgraded the company's H shares to buy from neutral. The H shares soared 20.32 percent to HK$21.80.
But financial heavyweights were generally weak. Industrial & Commercial Bank of China dropped 1.04 percent to 5.69 yuan, after a 2.68 percent surge on Monday made it the world's biggest bank by market capitalisation, narrowly exceeding Citigroup.
In another sign of concern about high valuations, several major companies performed well in Hong Kong, where their H shares are much cheaper, but poorly in Shanghai.