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Stock Indices Climb to New Highs Last Week
China's stock indices climbed up to new highs during the middle of the week, but they were weighed down by a market correction and profit-taking during the past two days.
The benchmark Shanghai composite index finished at 1935.031 points on Wednesday, resulting in a new closing high since the market rally began two weeks ago.
China's pending entry to the World Trade Organization has pushed up prices for textiles, steel, shipping and other indicators that are predicted to benefit from membership in the world trade group, analysts said.
But concern for foreign competition also led to uninspiring performances in high-tech, telecom and automobile shares, which trailed as the market surged.
On Monday, the indices slumped generally because of a correction in the steel sector, which led an earlier rally on both indices, buoyed by rising steel prices in China.
Brokers said institutions may have been reshuffling their portfolios to switch to lower-priced sectors.
The market was lifted by a surge in petroleum exploration-related shares on Tuesday.
A government announcement on Monday increasing prices of refined oils for a second time this year triggered a buying spree of petroleum exploration-related shares, brokers said.
But profit taking and new share listings that triggered fears of overly quick market expansion pulled down the indices on Thursday.
Investors are increasingly cautious because market barometer indices are climbing, so they are in a hurry to take profits, said analysts with Homeway.com.
Hard-currency B shares, which usually trail A-share trends, also plunged.
China's B shares have been propped up by unabated hopes for a merger of the hard currency B-share and domestic A-share markets.
"B shares have been rising steadily for more than two weeks, so it is not surprising to see punters take profits, following the fall in A shares," said a broker at Guotai J&A Securities.
They said four new share listings on Thursday diverted some capital. The listing has fuelled the selling of hard-currency stocks, which also slumped on profit-taking.
However, an official with the market watchdog China Securities Regulatory Commission (CSRC) has denied talk that the government might intervene in the stock market by controlling the pace of new domestic A-share issues.
A steep rise in number of new A-share issues since early April, following a lull during the first three months of the year, promoted market talk of CSRC intervention in the market.
The official was quoted as saying that the regulatory commission required companies whose IPO applications were still not approved at the beginning of 2000 to provide additional information about their 1999 results.
"Most companies had completed auditing their 1999 annual results by early April, which led to a quickened pace of new share issues,'' the official said.
The Shanghai composite index dropped 16.463 points on Friday from a week ago to 1900.787.
The Shenzhen composite sub-index edged up 2.51 points to 4731.39.
The hard-currency B-share index in Shanghai lost 5.386 points during the week to 51.274.
Shenzhen's B-share sub-index declined 19.88 points to 696.2.
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