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China shares sink to lowest level in more than a year
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20:05, April 17, 2008

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Chinese shares fell 2.09 percent on Thursday amid investor caution, with the benchmark Shanghai Composite Index down 68.86 points to 3,222.7, the lowest level since March 30 last year.

The decline took the index 47 percent below its record high in October.

The Shenzhen Component Index dropped 400.19 points, or 3.32 percent, to 11,657.08.

Losses outnumbered gains by 715 to 80 in Shanghai and by 565 to51 in Shenzhen. Aggregate turnover rebounded to 90.2 billion yuan (about 12.9 billion U.S. dollars) from 79.2 billion yuan on Wednesday.

"Market sentiment is extremely weak now and the downturn will continue in the short term," said analyst Hong Yanhua at Chengdu Huiyang Investment Consulting.

Analysts said investors' nerves were strained after Wednesday's reports of slower economic growth and higher inflation in the first quarter. Also, the central bank on Wednesday raised the bank reserve ratio requirement as part of the continued effort to curb excess liquidity.

Investors would remain cautious until positive policy signals emerged, according to securities company Shenyin and Wanguo.

Meanwhile, inflationary pressure hit the shares of electricity and steel firms, which were both affected by coal price rises, said Hong.

Most power shares fell on Thursday with fewer than 10 gainers. GD Power Development shed 5.56 percent to 5.94 yuan and Huadian Power International slumped 6.38 percent to 4.99 yuan.

Baosteel, China's largest iron and steel maker, went down 4.38 percent to 10.25 yuan. Ansteel fell 1.89 percent to 17.66 yuan.

Fan Gang, a member of the Monetary Policy Committee of the People's Bank of China (the central bank), said on Wednesday investors should not overrate the government's role in the stock market, and he urged them to increase their understanding of risk.

"The ongoing market correction is normal and relatively timely," he said.

Large-cap shares' performance diverged on Thursday. Ping An Insurance rose 3.63 percent to 56.31 yuan and China Petroleum and Chemical Corp. (Sinopec) rose 2.08 percent to 11.28 yuan.

China Shenhua Energy lost 4.71 percent to 43.06 yuan and PetroChina, the most heavily weighted stock in the Shanghai index, was 0.71 percent lower at 16.87 yuan.

The country's largest lender, the Industrial and Commercial Bank of China, edged up 0.17 percent to 5.79 yuan. China Merchants Bank dropped 1.38 percent to 29.37 yuan.


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