China stocks took a roller coaster
ride in the first two sessions after the Spring Festival, suffering a record
daily tumble Tuesday after reaching an all-time high the previous day.
Investors look at stock information
at a securities company in Shanghai February 27, 2007. [newsphoto]
The tumble set the tone for the stock trading in the Wall Street, according to
the Associated Press. The Dow Jones industrial average fell 546.02, or 4.3 percent, to
12,086.06 before recovering some ground in the last hour of trading to close
down 416.02, or 3.29 percent, at 12,216.24, the worst loss since Sept. 17, 2001,
the first trading day after the terror attacks.
benchmark Shanghai Composite Index, which tracks the bigger of China's stock
exchanges, fell 268.81 points, or 8.84 per cent, to 2,771.79, the biggest fall
in points since the index was launched. The Shenzhen Composite Index, which
tracks the smaller of China's bourses, plummeted 66.3 points, or 8.54 per cent
to 709.81. The Shanghai and Shenzhen 300 index of major companies in the two
bourses, lost 250.18 points, or 9.24 per cent to 2,457.49.
Led by big caps, more than 900 stocks in Shanghai and Shenzhen fell the daily
limit of 10 per cent.
The Industrial and Commercial Bank of China, the nation's biggest lender,
tumbled 7.86 per cent to 4.69 yuan. China Life, the country's biggest insurer,
lost 9.02 per cent to 33.89 yuan. Industrial Bank, which made an A-share debut
this month, was down 10 per cent to 24.11 yuan.
China Petroleum and Chemical Corporation (Sinopec), Asia's biggest refiner,
fell 10 per cent to 8.90 yuan.
China Vanke Co., the nation's biggest property developer, went from 9.97
percent to 14.26. Baoshan Iron & Steel Co., China's biggest steelmaker,
dropped 9.98 percent to 9.02. Citic Securities Co., the nation's biggest
publicly traded brokerage, lost 9.70 per cent to 36.21 yuan.
The decline came as some investors judged the Shanghai Composite Index's
record closing high Monday to be excessive relative to earnings potential,
according to Bloomberg News.
"The market's very sensitive as it's been trading at record levels and some
stocks are considered overvalued," Fan Dizhao, who helps manage about $1.8
billion with Guotai Asset Management Co. in Shanghai was quoted as saying.
"Investors are nervous about recent rapid gains and aren't convinced further
share-price increases can be sustained."
Speculation about possible measures against illegal capital also dragged on
the stocks, hexun.com reported.
The government is to introduce a series of measures to push the illegal
capital out of the equity market during the annual session of the National
People's Congress, China's top legislature, and the Chinese People's Political
Consultative Conference, the country's top advisory body, the China Banking
Regulatory Commission revealed Tuesday morning, according to speculations.
Some analysts deemed the dive another round of natural correction as
profit-taking pressure increased after the Shanghai index topped the
psychologically important level of 3,000.