Shares tumble as high crude prices plague world's airlines

By Wang Yanlin  |   2008-6-7  |     NEWSPAPER EDITION

SHANGHAI'S stocks fell for a fourth consecutive day yesterday, dragged down by blue chips in oil and airlines amid growing fears of higher crude oil prices.

The benchmark Shanghai Composite Index, which tracks yuan-denominated A shares and hard currency B shares, fell 0.66 percent, or 21.98 points, to end at 3,329.67. The index touched an intraday high of 3,371.28 and an intraday low of 3,312.72.

Losers outnumbered gainers 466 to 315 while 72 remained unchanged. Transactions settled at 42.7 billion yuan (US$6.17 billion), compared to 53.3 billion yuan on Wednesday.

The Shenzhen Composite Index, which tracks the nation's smaller bourse, also dropped 0.25 percent to 1,009.11.

"People expect a good start this month but the market simply has no incentives to support a rebound," said Zhang Qi, an analyst with Haitong Securities Co. "The declining transaction volumes show people's weak sentiment, while some are waiting to see where the direction heads for the key economic barometers, especially consumer prices."

The key Shanghai stock index lost more than 3 percent this week. The turnover kept sinking and dropped to a new low yesterday.

Dong Cheng, an analyst with the Beijing Shoufang Investment Management Co, said climbing crude oil prices intensified people's concerns for the erosion in earnings at refiners and airlines, while new initial public offerings added pressure to the market.

China Petroleum & Chemical Corp dropped 2.46 percent to 13.47 yuan after oil posted a record US$6 gain a barrel on overseas markets on Thursday. PetroChina Co, China's largest oil producer, also lost 1.83 percent to 17.17 yuan.

Air China Ltd, the country's largest international carrier, fell 2.40 percent to 12.21 yuan. China Eastern Airlines Corp declined 2.80 percent to 10.07 yuan.

Meanwhile, China Construction Co Ltd was granted approval by the securities regulator to issue 12 billion Class-A shares which are expected to raise more than 40 billion yuan. China State Construction Engineering Corp is also expected to raise 42.6 billion yuan from its planned IPO on the Shanghai Stock Exchange.