China shares hit three-wk closing low, HK retreats
Friday, 18 December 2009
HONG KONG/SHANGHAI, Dec 17 (Reuters): Shares in China dropped 2.34 per cent Thursday to their lowest close in three weeks, as the prospect of heavy new share supplies eroded sentiment. Hong Kong stocks skidded to a near three-week low, weighed down by fears of more fund outflows.
The Shanghai Composite Index ended down 76.135 points at 3,179.078, slipping for a third day in a row.
Losing Shanghai A shares far outnumbered gainers by 814 to 79, while turnover was flat from Wednesday at 123 billion yuan ($18.02 billion).
"Heavy share supplies are damping investor interest," said Wu Nan, analyst at Xiangcai Securities in Shanghai. He said the index may move lower in coming days to test support around the 60-day moving average, now at 3,111 points.
The index has been pressured over the past week by concerns about rising share supplies.
China's securities regulator announced late Wednesday that it had approved China First Heavy Industries, a heavy machinery manufacturer, for a Shanghai IPO aimed at raising up to 39 billion yuan.
Speculation that investors were rushing to cash in holdings to pay off bank loans before year-end, with mutual funds also seen as potential sellers, weighed on sentiment.
"Some mutual funds could walk away from the weak market as they have already reached their targets," said Qian Xiangjing, senior analyst at CITIC-Kington Securities in Hangzhou.
China Shipbuilding Industry sank 6.63 per cent to 7.75 yuan after gaining 12.47 per cent in a lukewarm market debut Wednesday, leaving it vulnerable to a drop below its IPO price
of 7.38 yuan in the near term.
The consumer sector was hit by profit-taking after recent gains, with FAW Car Co sinking 4.10 per cent to 24.80 yuan, while Sichuan Changhong Electric sank 4.73 per cent to 6.25 yuan.
Blue chips were weak, with oil refiner Sinopec Corp losing 3.15 per cent to 12.93 yuan and Baoshan Iron and Steel slipping 3.73 per cent to 8.51 yuan.
Gas shares outperformed as snowy weather hit parts of China, raising the possibility of supply shortages and price increases.
Changchun Gas and Datong Gas raced up by their 10 per cent daily limit.
In Hong Kong, the benchmark Hang Seng Index .HSI ended down 1.22 per cent or 264.11 points at 21,347.63, falling for a third straight session.
"Many people are talking about the outflow of hot money; maybe that's happening," said Peter Pak, vice-president at BOCI Research Ltd. "Sentiment looks sluggish since most people are on holiday."
"I expect turnover to decrease over the next few weeks and I don't see a huge upside from here," he said, predicting that the index could fall to 21,000 in the near term.
Chinese banks retreated in their third straight day of losses on persistent worries that Beijing might cool a lending binge.
China's banking regulator urged banks Wednesday to issue more syndicated loans, to help reduce the risk of bad loans after a burst of new lending this year.
China Construction Bank (0939.HK) and Bank of China fell to their lowest levels in more than two months, down 1.68 per cent to HK$6.45 and 1.46 per cent to HK$4.04, respectively.
Industrial and Commercial Bank of China (1398.HK) inched up 0.16 per cent to HK$6.31, erasing losses from the morning.
But some brokers said the sell-off was overdone.
The Shanghai Composite Index ended down 76.135 points at 3,179.078, slipping for a third day in a row.
Losing Shanghai A shares far outnumbered gainers by 814 to 79, while turnover was flat from Wednesday at 123 billion yuan ($18.02 billion).
"Heavy share supplies are damping investor interest," said Wu Nan, analyst at Xiangcai Securities in Shanghai. He said the index may move lower in coming days to test support around the 60-day moving average, now at 3,111 points.
The index has been pressured over the past week by concerns about rising share supplies.
China's securities regulator announced late Wednesday that it had approved China First Heavy Industries, a heavy machinery manufacturer, for a Shanghai IPO aimed at raising up to 39 billion yuan.
Speculation that investors were rushing to cash in holdings to pay off bank loans before year-end, with mutual funds also seen as potential sellers, weighed on sentiment.
"Some mutual funds could walk away from the weak market as they have already reached their targets," said Qian Xiangjing, senior analyst at CITIC-Kington Securities in Hangzhou.
China Shipbuilding Industry sank 6.63 per cent to 7.75 yuan after gaining 12.47 per cent in a lukewarm market debut Wednesday, leaving it vulnerable to a drop below its IPO price
of 7.38 yuan in the near term.
The consumer sector was hit by profit-taking after recent gains, with FAW Car Co sinking 4.10 per cent to 24.80 yuan, while Sichuan Changhong Electric sank 4.73 per cent to 6.25 yuan.
Blue chips were weak, with oil refiner Sinopec Corp losing 3.15 per cent to 12.93 yuan and Baoshan Iron and Steel slipping 3.73 per cent to 8.51 yuan.
Gas shares outperformed as snowy weather hit parts of China, raising the possibility of supply shortages and price increases.
Changchun Gas and Datong Gas raced up by their 10 per cent daily limit.
In Hong Kong, the benchmark Hang Seng Index .HSI ended down 1.22 per cent or 264.11 points at 21,347.63, falling for a third straight session.
"Many people are talking about the outflow of hot money; maybe that's happening," said Peter Pak, vice-president at BOCI Research Ltd. "Sentiment looks sluggish since most people are on holiday."
"I expect turnover to decrease over the next few weeks and I don't see a huge upside from here," he said, predicting that the index could fall to 21,000 in the near term.
Chinese banks retreated in their third straight day of losses on persistent worries that Beijing might cool a lending binge.
China's banking regulator urged banks Wednesday to issue more syndicated loans, to help reduce the risk of bad loans after a burst of new lending this year.
China Construction Bank (0939.HK) and Bank of China fell to their lowest levels in more than two months, down 1.68 per cent to HK$6.45 and 1.46 per cent to HK$4.04, respectively.
Industrial and Commercial Bank of China (1398.HK) inched up 0.16 per cent to HK$6.31, erasing losses from the morning.
But some brokers said the sell-off was overdone.