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Stocks Rise Prudently After Two-day Rebound
China shares gave ground on Thursday as investors grew cautious and cashed in on a two-day rebound sparked by the suspension of a scheme to trim huge State holdings in listed firms.
The Shanghai B-share index fell 2.32 per cent to 155.086 points, while Shenzhen's slid 3.45 per cent to 248.12. Turnover tumbled about 70 per cent on each bourse.
Domestic A shares, off limits to foreign investors, ended down more than 2 per cent after slow trade as retail punters rushed to pocket gains from the brief rally.
Chinese investors had worried the scheme to sell off State shares would swamp the markets. They took the suspension, announced on Tuesday, as a sign of government support for the floundering markets.
They plunged in, driving B shares up more than 10 per cent and A shares about 13 per cent by the close on Wednesday.
But profit-taking set in on Thursday and brokers said more investors expected the policy-led rebound to fizzle as a government campaign to clean up corruption in the decade-old markets showed no sign of ending.
They also said institutional investors were unlikely to build heavy positions as the book-closing season for the year drew near.
"Investors' views on the market outlook are getting mixed. Some expect the bearish trend is not reversed yet because institutional investors may not come back to the market," said analyst Guo Yong of GF Securities.
"Also, they believe the selldown suspension is a temporary measure," he added.
Brokers said the markets were expected to open lower today, although the downside was likely to be limited following a market slide already lasting for nearly four months.
The index retreat, which accelerated in afternoon trade, helped erase morning gains in telecommunication plays. But integrated circuits maker Shanghai Belling still managed to end sharply higher due to its shareholder change.
The counter, reserved for Chinese investors, surged 7.31 per cent to 19.96 yuan (US$2.4) after Shanghai Belling announced on Wednesday Alcatel Shanghai Bell would become its second largest shareholder in place of Shanghai Bell.
Telecom giant Alcatel SA said on Tuesday it would buy control of Shanghai Bell and fold the French firm's China operations into it to create one of the country's top two network gear suppliers.
Shanghai Bell now owns a 25.64 per cent stake in listed Shanghai Belling.
B shares of cellphone maker Eastcom and network gear producer Nanjing Putian both rose in the morning. But they finally fell victim to the broad profit-taking that left the B-share top gainers lists nearly empty by the end of trade.
Eastcom's B shares closed down 1.67 per cent at US$1.233 after edging up 0.32 per cent in early trade. Putian's had risen 1.32 per cent by midday before finishing down 1.20 per cent at HK$1.05.
The Shanghai Composite index ended at 1,676.499, down 2.42 per cent, while the turnover on the Shanghai Stock Exchange was 12.44 billion yuan (US$1.5 billion).
The Shenzhen sub-index was down 2.60 per cent to 3,450.40 with a trading value of 6.07 billion yuan (US$734 million).
Dongbei Electricity and Trading Centre were the top losers on the Shanghai B shares market with more than 3 per cent drop, while Hubei Sanonda and Nanshan Power suffered most on the Shenzhen market down about 7 per cent.
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