Chinese stocks plummet

11 Oct, 2008

The Chinese stock market fell sharply on Friday because of the crash of global share prices, but China outperformed Asia as banking stocks came well off early lows on hopes for government intervention. The Shanghai Composite Index ended down 3.57 percent at 2,000.572 points, off a low of 1,963.183. It plunged 12.78 percent over the week.
Many analysts believe the government, which launched a rescue plan for the market late last month, wants to keep the index above 2,000 points. That helped China outperform other Asian stock markets on Friday; the MSCI index of Asia-Pacific stocks excluding Japan was down more than 7 percent.
The share prices of top Chinese banks have neared levels where Central Huijin, a government fund, bought small amounts of their shares in late September as part of the rescue effort. Hopes for more such buying boosted Industrial & Commercial Bank of China, the biggest bank, off its low of 3.85 yuan on Friday. It ended down 1.48 percent at 4.00 yuan.
One market source said exchange data suggested Huijin had bought big bank shares repeatedly since late September, although this could not be confirmed. The biggest stock in the market, PetroChina, ended up 0.16 percent at 12.16 yuan after bouncing sharply from a low of 11.69 yuan. Traders speculated that government buying might be responsible.
But analysts said that with global markets continuing to plunge, they could not rule out a pullback by the Shanghai index to near the 22-month low of 1,802 points hit on September 18, before the rescue package was announced. Falling Shanghai stocks outnumbered gainers by 885 to 45 on Friday, with over 140 Shanghai A shares plunging their 10 percent daily limits.
Turnover in Shanghai A shares was a thin 38.3 billion yuan ($5.6 billion) against Thursday's 35.8 billion yuan. Property developers were sharply lower on Friday with Vanke down 5.44 percent at 5.91 yuan. Coal shares were hit hard by the fall in global energy prices, with Shenhua Energy sliding 5.65 percent to 20.22 yuan.
Oil refiner Sinopec slipped 3.83 percent to 9.80 yuan, although its margins should benefit from falling global oil prices. A total of 4.34 billion shares in the firm became tradable on Friday as a lock-up period expires, though analysts said they did not expect major selling as a result.
Industrial metals shares tumbled on fears of a global recession. Yunnan Chihong Zinc & Germanium sank 10 percent to 9.23 yuan after estimating its net profit in the first three quarters of this year shrank about 70 percent.
Among gainers, Gansu Qilianshan Cement jumped 5.32 percent to 4.75 yuan after forecasting its net profit in the first three quarters would grow more than 400 percent. Gold producers were firm because of the rebound in global gold prices, with Shandong Gold up 2.51 percent to 39.99 yuan.

Read Comments