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Stocks keep plunging deep in morning session

By Li Zengxin (chinadaily.com.cn)
Updated: 2007-06-05 11:27

Special coverage: Markets Watch  Related readings:  China stock market sees biggest single-day slump in history  Index dives 109 points, nearly losing 4,000 battleground, 06/01

Chinese stocks kept diving deep this morning, with little sign of hitting a bottom and turning back. The Shanghai Composite Index, closed at 3,462.52 by 11:30, down 207.88 points or 5.66 percent from yesterday's closing.

Due to a much lower opening from 3,564.43, a sharp rise in the benchmark index right after the opening only lift it back to above yesterday's closing, and it failed to stay on the highest 3,691.18. The lowest point 3404.15 was hit at around 11:10.

The Shenzhen Component Index, tracking the smaller Shenzhen Stock Exchange, opened from 10,933.22, also lower, and closed at 10,886.51, down 581.95 points or 5.07 percent. The index went through the morning session within a range from 10,652.19 to 11,659.97.

Of the A shares, only 57 saw their prices climb up, while 1,276 fell and 138 unchanged. Of the few gainers, Zhejiang Feida Environmental Science and Technology with a 6.67 percent rise to 10.4 yuan, and Yinxing Energy with a 10.03 percent rise to 12.73 yuan ranked on top in Shanghai and Shenzhen respectively.

Heavyweights ranking on top in terms of trading volume and transaction value in the exchanges such as China Unicom, the Industrial and Commercial Bank of China, Bank of China, Sinopec and China Vanke, all slid to press the index further down.

B shares also dropped. Of the 109 B shares listed on the two exchanges, only 18 rose and six ended flat. Weifu High-Tech rose 6.29 percent to 10.82 yuan against the trend as the biggest gainer of B shares.

All funds fell this morning, triggering more fears among investors replenishing their holdings for cash.

The stock market capitalization has decreased 17 percent within just four trading days since last Wednesday when the stamp tax was raised at mid night to 0.3 percent.

Total market value of the two stock exchanges was 15,793.3 billion yuan by yesterday's closing, down 1,421.6 billion yuan or 8.25 percent from last Friday.

The total market value by May 29 - the day before the tax change - was 19,023.5 billion yuan. The recent plunges in share prices have erased 3,230.2 billion yuan from the stock market. Total market value of the stock markets was 17 percent less in just four trading days.

The continuous drop also damaged investor confidence. The new A-share account opening last Friday was 227,000, the smallest amount for more than a month. Total account opening was 418,800 at the two stock exchanges, including 3,734 B-share and 188,000 fund accounts for that day, according to China Depository and Clearing Co Ltd.

By June 1, there were 102,264,100 investment accounts in the domestic stock market, including 88,459,700 A-share, 2,180,800 B-share and 11,623,600 fund accounts.

To expand capital outflow channels, the China Securities Regulatory Commission (CSRC) approved four new funds yesterday, according to sources involved in the matter. The fund managers, Invesco Great Wall Fund Management, Yimin Asset Management, GF Fund Management and Fortune SGAM Fund Management will issue stock investment-oriented fund products soon. Invesco Great Wall's blue-chip funds will be released next week.

The initial public offering (IPO) committee of CSRC also approved the listing of COSCO Holdings yesterday. The container shipment, port, container leasing and logistic business operator will issue no more than 1.784 billion A shares.