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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