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Benchmark stock index tumbles

By Jin Jing and Hui Ching-hoo (China Daily)
Updated: 2007-02-01 10:16

SHANGHAI: After months of hectic trading and dizzying price surges, the Chinese stock market yesterday received a jolt from profit-taking by institutional investors, which sent the key indicator down 4.9 per cent the biggest one-day drop in eight months.

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The Shanghai Composite Index, the most widely-watched indicator of the mainland stock market, fell 144 points to close at 2,786.

The smaller Shenzhen Composite Index slid 5.8 percent to 655.53.

Stocks in the financial sector took the biggest hit. China Minsheng Bank tumbled 9 percent to 12.02 yuan ($1.54). China Life, which had risen 8 percent since its debut on theShanghai Stock Exchangeon January 9, fell 4.4 percent to 38.21 yuan ($4.87).

Real estate companies also felt the force of the correction, nearly all of them falling. Vanke A, for instance, dived 9.41 percent andBeijingNorth Star, 7 percent.

Analysts said the "over-due" correction was triggered by a string of cautionary remarks by investment experts and government officials on potential market risks. The Shanghai stock index, for example, had risen 134 percent since the beginning of 2006.