Shares fall on renewed economic jitters

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(China Daily)
Updated: 2009-05-22 08:12

China's stocks fell for a second day, led by automakers and financial companies.

The Shanghai Composite Index, which tracks the bigger of China's exchanges, fell 40.79, or 1.5 percent, to 2,610.62 at close. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 2.2 percent to 2,750.01.

"Stocks are expensive now and have reached a level investors deem too high to be pushed up further," said Zhang Ling, a fund manager at ICBC Credit Suisse Asset Management Co in Beijing. "Corporate earnings have yet to catch up."

The Shanghai index has gained 43 percent in 2009 on optimism that a 4-trillion-yuan stimulus package and removal of loan restrictions will revive growth as exports slump.

"Renewed concern about China's growth momentum could trigger a market correction," Dong Tao, a Hong Kong-based economist at Credit Suisse said in a report.

The comments add to concerns raised by the World Bank and Oppenheimer & Co this week that investors may have been too optimistic about the pace of recovery of the world's third-biggest economy.

China is the most-favored bet among global emerging-market stock investors following a "major U-turn" on growth expectations for the world's third-largest economy, according to a Merrill Lynch & Co survey.

The World Bank said on Wednesday enthusiasm about a recovery may be "premature". Katherine Lu, Oppenheimer's China equities director, said the economy is "struggling" and may fall short of the government's 8 percent growth forecast.

SAIC Motor fell 3.3 percent to 14.20 yuan, paring its annual advance to 165 percent. Beiqi Foton Motor Co, China's biggest commercial-vehicle maker, lost 4.1 percent to 12.32 yuan. Fengfan Co, a manufacturer of automobile batteries, declined 6.3 percent to 14.54 yuan, after more than tripling this year through May 18.

Hang Seng down 1.58%

Hong Kong shares shed 1.58 percent yesterday, falling for a second straight day amid shrinking turnover as confidence about a global economic recovery waned.

The benchmark Hang Seng Index was down 276.35 points at 17,199.49.

"Buying power has diminished and it looks like the rally has temporarily ended," said Alfred Chan, chief dealer with Cheer Pearl Investment.

Turnover shrank to HK$60.9 billion from Wednesday's HK$73.9 billion.

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