China's shares dipped 0.8 percent on Tuesday as investors, unhappy with compensation offered under a pilot programme to sell state shares, dumped big caps such as Baoshan Iron and Steel Co Ltd. The benchmark Shanghai composite index ended at 1,039.043 points, extending a 0.6 percent drop at midday.
"Investors are mostly disappointed with compensation offered by big state firms," said Yang Bo, an analyst with Guosen Securities. "Selling is their way of venting grievances." Baosteel, the country's top steel maker, lost 2.6 percent to finish at 4.96 yuan. Sinochem International Corp, a unit of state oil trader Sinochem Corp, was among the biggest losers of the day, diving 7.4 percent to 5.17 yuan, extending a 6.5 percent plunge at the noon break.
Beijing kicked off a programme in April to sell down more than $200 billion of non-traded government holdings in listed firms, a move to enhance market transparency and finance a patchy welfare system. Several firms hand-picked to sell down state shares, including Baosteel and Sinochem, promised compensation - in the form of cash, bonus shares and warrants - to appease their minority shareholders. However, survey results released by the official Shanghai Securities News on Tuesday showed nearly 70 percent of investors polled are unhappy with what the firms have to offer.
They could continue to trim their holdings, sending the market to new lows, analysts said. The index is down nearly 18 percent so far this year, surpassing in six months a 15 percent slump in 2004 that made it the world's worst performing major index.