BEIJING -- China's stocks fell to a seven-week low Thursday amid gloom about weakening corporate profits and a worsening economic decline.
Investors look at the stock price monitor at a stock brokerage house in Chongqing, Wednesday, Dec. 24, 2008. China's stocks fell to a seven-week low Thursday amid gloom about weakening corporate profits and a worsening economic decline. [Xinhua]
The benchmark Shanghai Composite Index shed 0.61 percent, or 11.38 points, to close at 1,852.42, its lowest closing since Nov. 11. The Shenzhen Composite Index for China's smaller second market lost 0.36 percent, or 2.07 points, to close at 572.99.
Investors are pessimistic about Chinese corporate profits as economic growth slows amid a global downturn. Xinhua News Agency on Thursday quoted the chairman of the body that controls China's major state-owned companies, as saying their profits fell 12.3 percent in the past 11 months. He said the situation next year would be "grim."
China's economy is expected to grow by about 9 percent this year, but manufacturing, investment, auto sales and other areas are all weakening rapidly.
Airline stocks fell amid concern about weakening travel demand. China Southern Airlines Ltd., fell 3.69 percent to 3.39 yuan, while Air China Ltd. shed 2.59 percent to 4.13 yuan. China Southern and another carrier, China Eastern Airlines, have received government aid to get them through the economic slump.
Aluminum Corp. of China lost 3.27 percent to close at 6.51 yuan amid mounting concern about China's manufacturers, its key customers.
Dairy stocks were battered after the bankruptcy this week of Sanlu Group Co., the dairy at the heart of China's tainted milk scandal. Inner Mongolia Yili Industrial Group, a major milk supplier, plunged 6.11 percent to 8.14 yuan.
Banks were mixed. China Construction Bank Ltd., the country's second-largest commercial lender, was up 0.25 percent at 3.96 yuan, while No. 3 Bank of China Ltd. lost 0.33 percent to close at 3.04 yuan.
On currency markets, China's yuan rose to 6.8385 to the US dollar at about 0900 GMT, up from 6.8485 on Wednesday.