Chinese shares drop for second day on Ping An fundraising rumor

18:56, January 06, 2011      

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Chinese equities closed lower for a second day Thursday amid speculation Ping An Insurance plans to raise 40 billion yuan.

The benchmark Shanghai Composite Index fell 0.51 percent, or 14.39 points, to close at 2,824.2 points.

The Shenzhen Component Index lost 0.38 percent, or 47.97 points, to close at 12,599.66 points.

Combined turnover shrank to 206.2 billion yuan (31 billion U.S. dollars) from 243.02 billion yuan the previous trading day.

Losers outnumbered gainers 503 to 369 in Shanghai and 717 to 409 in Shenzhen.

Ping An Insurance (Group) Co., China's second-largest insurance company, dropped 4.14 percent to 52.59 yuan amid speculation the company might need to raise 30 to 40 billion yuan to replenish capital.

However, Sheng Ruisheng, a spokesman for Ping An, told Xinhua after the market closed he "had not heard of any fundraising plan."

"The company's fundamentals are in a normal condition," he said.

Insurance sector shares fell 2.59 percent, with China Pacific Insurance (Group) Co. Ltd, the country's third-largest insurer, dropping 1.58 percent to 22.42 yuan.

Coal shares retreated over 1 percent, with Huolinhe Opencut Coal Industry Corporation losing 2.57 percent to 25.44 yuan and Kailuan Energy Chemical Co., Ltd. falling 2.31 percent to 21.96 yuan.

Electricity producers bucked the trend after the Chinese government announced late Wednesday it would continue efforts to expand and upgrade its rural power grid networks over the next five years to meet increased demand.

Datang International Power Generation Co., one of the country's power giants, climbed 0.65 percent to 6.18 yuan. Huadian Power International Corporation rose 0.31 percent to 3.28 yuan.

Source: Xinhua
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