Index down at midday as steel, coal firms sink

By Lydia Chen  |   2008-6-5  |     ONLINE EDITION

SHANGHAI'S key stock index fell in the morning session today as steel makers and coal producers slid on speculation price controls will hurt earnings.

The Shanghai Composite Index lost 1.02 percent, or 34.39 points, to 3,335.52 at 11:30am. The index is comprised of yuan-denominated A shares and hard-currency B shares.

Losers in the Shanghai market outnumbered gainers 598 to 189 while 19 were unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.34 percent, or 13.72 points, to 1,007.64.

China Shenhua Energy Co and Shanxi Xishan Coal & Electricity Power Co led the declines among coal producers. Baoshan Iron & Steel Co dropped after it said it will keep prices unchanged in the third quarter.

China Shenhua Energy Co, the nation's biggest coal producer, slumped 5.49 percent to 43.17 yuan (US$6.22) and Shanxi Xishan Coal & Electricity Power Co sank 4.31 percent to 51.75 yuan.

Baoshan, China's biggest steel maker, lost 3.43 percent to 11.54 yuan while Anshan Iron & Steel Co slid 3.70 percent to 19.26 yuan.

Baoshan said it will keep third-quarter prices unchanged after the government ordered domestic mills to hold prices at the same level as before the May 12 earthquake.

The China Iron and Steel Association ordered its members to hold prices at levels prevailing before the 8.0-magnitude earthquake, the National Development and Reform Commission, the nation's top planning agency, said on Tuesday.

Investors also sold off bank shares after the China Securities Journal said the banking regulator ordered lenders to stop selling wealth management products online or by phone.

China Merchants Bank Co lost 1.43 percent to 28.36 yuan and Bank of China buckled 1.05 percent to 4.69 yuan.