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Stock market slumps to 6-year low
(China Daily)
Updated: 2005-04-26 08:51
China's stocks closed at a six-year-low yesterday on concerns about impending
new share issues.
The benchmark Shanghai composite index slid by 0.96 per cent to finish at
1,157.921 points, the lowest close since it ended at 1,147.71 on May 20, 1999.
The index has been falling for eight consecutive sessions and is so far down
more than 8 per cent since the start of this year.
The newly launched Shanghai & Shenzhen 300 Index, which tracks stocks in
both cities, also edged down 0.96 per cent to 930.07 yesterday.
"Investor sentiment is very weak now after the benchmark index repeatedly hit
new lows," said Peng Lixin, an analyst at CITIC Securities.
The China Securities Regulatory Commission announced last Friday that its
listing committee would start reviewing two new initial public offering (IPO)
applications today.
The committee has resumed IPO reviews after a nine-month gap.
Several companies have announced additional share issues, including a US$3.15
billion offering by steel giant Baoshan Iron and Steel Co Ltd.
That sparked fresh fears of quick market expansion as investors expected more
sales in the short term, said Peng.
The listing of more good quality companies should have a positive impact on
the development of the bourses, said Li Yongsen, a professor at the Finance and
Securities Institute of the Renmin University of China.
But the misbehaviour of some already listed companies, who focus more on
raising money instead of improving their performance, has eroded investor
confidence, which is part of the reason for the heavy selling, Li said.
Under such circumstances, regulators should better control the pace of new
share issues and IPOs to balance supply and demand, he said.
Investors are also expecting a satisfactory plan for the circulation of State
holdings in listed firms since regulators expressed their determination to solve
the matter more than a week ago.
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