Chinese stocks decline

28 Oct, 2006

Chinese shares ended lower on Friday as Industrial and Commercial Bank of China staged a lacklustre debut, though many analysts said ICBC's modest rise could prove positive for the market in coming weeks.
ICBC's A-shares closed at 3.28 yuan, 5.13 percent higher than their initial public offer price and just above their intra-day low of 3.26. The stock hit a high of 3.44 yuan in the opening minutes, but then edged down for most of the day. The debut was below the expectations of many traders, who had thought ICBC would end the day up 10 percent.
The benchmark Shanghai composite index closed down 3.471 points or 0.19 percent at 1,807.175 points, after hitting a five-year intra-day peak of 1,842.730. Its drop understated the weakness of the market, since analysts calculated that ICBC's rise was in itself worth a gain of about 20 points.
Turnover in Shanghai A-shares was 34.3 billion yuan ($4.35 billion), up from 25.3 billion on Thursday, but ICBC shares accounted for 8.6 billion yuan of the total.
ICBC's H-shares closed at HK$3.52 in Hong Kong, leaving the A-share at a discount of about 8 percent - a slightly bigger discount than the several percent which Shanghai traders had expected.
However, analysts said the lack of a big speculative jump in ICBC upon listing in Shanghai was probably positive by suggesting the stock, with a weighting of about 20 percent in the index, had relatively little downside.
China Merchants Bank fell 2.71 percent to 10.42 yuan, though the Hong Kong- and Shanghai-listed lender posted slightly better-than-expected quarterly earnings on Thursday.
Bucking the trend was Huaxia Bank Co, which rose 1.5 percent to 4.73 yuan ahead of its third-quarter results next Tuesday. China Southern Airlines Co, the country's largest airline by fleet size, gained 0.96 percent to 3.15 yuan after it reported a 51 percent rise in third quarter net profit late on Thursday.

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