Chinese shares slump sharply on profit-taking

Updated: 2006-12-09 10:42

Chinese shares slumped sharply Friday as the benchmark Shanghai Composite Index, a major index of Chinese shares, closed at 2,093.64 points, down 63.11 points, or 2.93 percent.

Over 1,226 stocks were down while only 142 stocks were up.

The Shanghai market opened at 2,133.35 points, down 33.40 points, or 1.08 percent weaker. The index tracks both yuan-denominated A shares and hard-currency B shares traded on the Shanghai Stock Exchange.

The Shenzhen Component Index was down 170 points to close at 5,641.48 points. The turnover volume on the two markets reached 70.6 billion yuan (9 billion US dollars).

Analysts attributed the slump to profit-taking by fund companies. After recent climb of Chinese stock indices, the fund companies began to sell their stocks for profits. Other prudent investors also followed them as the Shanghai Composite Index is near the highest record.

The Industrial and Commercial Bank of China, the Bank of China, Sinopec and BaoSteel had once drawn the declining market up in the morning session. But the telecom and shipping stocks, which had been on continuous rise in previous days, dropped sharply and affected investors' confidence.

Share price of China Unicom dropped 8 percent and Datang Telecom 10 percent on the day. ZTE, a telecom equipment provider believed to take profits in China's upcoming third generation mobile network, also declined 4.7 percent.

Despite the slump on Friday, the factors that have long-term influence on China's stock market did not change and analysts still expect the major index to break the highest record which was 2,245 points.

Wan Bing, analyst with Guangfa Securities, said it is good time to buy stocks of great potentials. But some other analysts warned that investors should be cautious.

(For more biz stories, please visit Industry Updates)

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