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China's A-share capitalization drops 13 percent over 25 days in August
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15:51, August 26, 2009

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Since the start of August, the total value of the Shanghai and Shenzhen stock markets has plummeted by 13 percent within just 25 days. As of closing on August 25, the total value of the Shanghai and Shenzhen stock markets dropped to 20.38 trillion yuan and the average PE ratio for the component stocks of the Shanghai-Shenzhen-300 Index fell to 24.41 times.

Industry insiders believe that the market shows noticeable short-term fluctuations and a correction trend, and that it is still possible for stock indices to drop to record lows in the future.

On August 25, the combined net outflow of funds from the Shanghai and Shenzhen stock markets reached 15.73 billion yuan, of which 7.63 billion yuan were from institutional investors and 8.2 billion yuan from individual investors. Only 10 of the 77 industries in the two markets saw net inflows of funds, and 85 percent of the industries suffered net outflows.

Analysts believe that large refinancing projects are the main reason behind the A-share market "roller coaster." For example, Beijing Capital Land plans to issue a maximum of 1.4 billion A-shares to raise funds totaling as much as 9.55 billion yuan, while SPD Bank plans to raise funds of 15 billion yuan.

Data from the China Securities Regulatory Commission also indicates that at the end of July, China's domestic capital markets had raised 2.5 trillion yuan in enterprises' equity financing.

In fact, on August 25, stock markets, including those in Europe and the Asia-Pacific region, also experienced different degrees of profit-taking. Overseas analysts believe that investors remain wary of global economic recovery. After several months of increases, investors are more willing to invest their funds in low-risk investment products such as gold.

By People's Daily Online

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