Shares drop to six-year low
(China Daily)
Updated: 2005-03-31 08:53

China's shares were pulled down to their lowest close in nearly six years yesterday due to weak investor sentiment.

The benchmark Shanghai composite index shed 1.88 per cent to close at 1,172.574 points yesterday, its lowest finish since it ended at 1,168.72 on May 21, 1999.

The index has been falling for four consecutive sessions since last Friday.

It is now down more than 7 per cent this year, after diving 15 per cent in 2004.

Investor confidence has been eroded by the lack of concrete reform efforts in the stock market as well as signs of a quick market expansion as two more large-caps are heading for A-share listings and more listed companies have announced refinancing plans, said analysts.

Hong Kong-listed Datang Power and China Aluminium Corporation recently announced plans to issue up to 500 million and 1.5 billion A shares. The two issues, if approved by regulators, are expected to raise combined proceeds of around 12 billion yuan (US$1.4 billion) from the A-share market.

Investors are also concerned about fresh credit tightening measures that may hit the bottom lines of some corporations, after People's Bank of China Governor Zhou Xiaochuan made his latest remark on monetary policy in an interview with the People's Daily on Tuesday.

Zhou said inflationary pressures had yet to be fully relieved and property prices in some cities are rising too fast, regarded by the market as a hint of potential interest rate hikes, analysts said.

The Shenzhen sub-composite index also lost 2.21 per cent to finish at 3,137.46 yesterday.

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