Stock Markets Continue to Fall on Epidemic Fears

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Last updated at: (Beijing Time) Wednesday, April 23, 2003

Stock Markets Continue to Fall on Epidemic Fears

China's shares closed slightly lower again Tuesday as fears of an outbreak of severe acute respiratory syndrome (SARS) virus terminated a short-lived technical rebound in morning trade, brokers said.

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China's shares closed slightly lower again Tuesday as fears of an outbreak of severe acute respiratory syndrome (SARS) virus terminated a short-lived technical rebound in morning trade, brokers said.

Shanghai's B share index fell 0.46 per cent to 124.634 points, while Shenzhen's slipped 0.08 per cent to 220.25. Hard currency B shares are open to Chinese and foreign investors.

Jinan Qingqi Motorcycle Co, which lost money in 2000 and 2001, was the biggest decliner and ended down 4.92 per cent at an all-time low of US$0.251 after the Shanghai stock exchange blasted the company for poor disclosure.

The exchange criticized Jinan Qingqi in a statement yesterday for forecasting a heavy loss for 2002 in early April - an about-face from earlier predictions of profit.

Indices slid about two per cent on Monday when punters fled tourism and airline shares after the government announced an alarming spike in cases of SARS and sacked two senior officials for mishandling the crisis.

"Recent reports and rumours about SARS have made investors uneasy," said analyst Luo Yanxin at Guohai Securities. "Many are reluctant to trade stocks. We expect share indices to move narrowly in the near term."

Yesterday's fall was also prompted by profit-taking in drug makers which had surged over past weeks as punters bet the SARS spread would help give such companies a shot in the arm.

Yuan-denominated A shares in antibiotics and traditional Chinese medicine maker Sanjiu Medical fell 2.37 per cent to 9.90 yuan (US$1.20). The listed arm of China's top drug marker is nonetheless up 17 per cent from March 26.

Auto stocks bucked the downtrend. They have attracted strong interest this year as the domestic industry boomed.

Top Chinese minivan maker Chongqing Chang'an Automobile's B shares were the most actively traded and one of the biggest gainers, closing up 3.04 per cent at HK$6.10 (US$0.78) as a heavy 10.65 million shares changed hands.

Its B shares have surged 110 per cent since October 28.

Shanghai's A share index finished 0.19 per cent lower at 1,641.131 points but its Shenzhen counterpart inched up 0.15 per cent to 461.17.

China's yuan eased one notch against the US dollar to 8.2770 yesterday due to a pick-up in hard currency demand from importers, dealers said.

The yuan moved in a tight range of 8.2769 to 8.2771. Turnover fell slightly to US$350 million from Monday's US$380 million.

Dealers said the market shrugged off fears that a more widespread domestic outbreak of the deadly SARS virus than previously reported might hit economic growth by subduing spending and tourism.

"Up to now, we have yet to see any impact from SARS on this market," said a dealer at a state-owned bank, adding that dollar buying by importers pushed the yuan down slightly.

The yuan is not fully convertible on the capital account and reacts mainly to US dollar demand and supply arising from trade flows.

China said its economy grew 9.9 per cent year on year in the first quarter, the fastest pace in six years.

Exports soared nearly 34 per cent to more than US$86 billion, although high oil prices and heavier imports of raw materials, machinery and cars led to a slight trade deficit of about US$1 billion over the period.

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