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An investor looks at the dropping stock index
in a stock exchange office in Zhengzhou, Henan Province September 9, 2004.
(newsphoto) |
China's shares dropped to a five-year low
Thursday, as heavy selling of
blue-chip stocks by some institutional investors further eroded the weak
investor confidence in the stagnant market.
The benchmark Shanghai composite index , grouping A shares and
hard-currency B shares, finished down 1.9 per cent at 1,284.307 points
Thursday, after touching 1,281.749, the lowest since June 4, 1999.
Some of the biggest fallers were among blue-chip stocks, such as
Baosteel, one of China's biggest steel maker, whose A shares fell 3.1 per
cent to 5.89 yuan (US$0.711) Thursday.
Analysts said the fact that the index dropped
below the psychologically important level of 1,300 points would further
weigh down
market sentiment
that was already weak.
The 1,300-point has been generally regarded as the
testing point for bourses
. The market had rebounded after reaching the level several times
in the past, but it did not hold on this time.
"More investors are now losing confidence in the listed companies,
because many do not give returns and simply use the market to raise
funds," said an official with Southern Fund Management Co.
Investor sentiment was also affected by speculation that policy-makers
are unlikely to come to the rescue with a fresh policy boost.
The China Securities Regulatory Commission (CSRC) held an internal
conference in Shenzhen Stock Exchange over the weekend to discuss the
problems in the market and ask for views on the solution.
A CSRC official said during the conference that the commission does not
intend to rescue the market with a policy boost, but put more focus on
curing the existing problems, according to sources that attended the
meeting.
The Shanghai composite index has plunged by more than 27 per cent since
early April, hit by the authorities' macroeconomic measures to cool down
the economy, including tighter the credit supply and curbing
overinvestment in some overheating sectors.
Reports that predicted a possible interest rate
hike in the near term also put more pressure on the market, although central bank officials said no decision would be made until August's
major economic indicators are revealed.
(China Daily) |