China's stocks closed at a new six-year low after the week-long holiday yesterday.

The Shanghai composite index dropped 2.44 per cent to finish at 1,130.83, the lowest close since its 1,109.09 close on May 19, 1999.

The Shenzhen sub-composite index also shed 3.97 per cent to 3,031.5 yesterday. And the newly introduced Shanghai & Shenzhen 300 Index, which tracks shares both in Shanghai and Shenzhen, also lost 2.49 per cent to end yesterday at 909.17.

Combined transactions in the two bourses were about 8.4 billion yuan (US$1 billion), slightly down from the previous session.

The China Securities Regulatory Commission (CSRC) released a guideline regulation on the programme on April 29, just before a nine-day-long break for the bourses for the May Day holiday.

Four A-share companies yesterday announced their intention to kick off the experiment of circulating nontradable shares and offering relevant payment to minority shareholders, with more detailed proposals expected in the coming sessions.

Trading in the stock of all four companies was suspended yesterday.

Analysts said opinion was split on the newly launched programme of selling untraded State and legal person shares in the listed firms.

Some investors worried they may not get sufficient compensation from the State share sell-down and some were still unprepared for the news, said an analyst with Haitong Securities.

But some investors also bought actively on stocks that market rumours said might become the next pilot firms to try the nontradable share sell-off scheme.

The short-term impact of the news of the nontradable share flotation could be limited as regulators will not allow all nontradable shares to flood the market in one go, said Dong Chen, an analyst with China Securities.

But in the long run, the flotation of these shares may push down average price/earnings ratios and further polarize share prices.

(Xinhua)

transaction: the act of transacting within or between groups (as carrying on commercial activities)（交易）