Shanghai market plunges 6.5% on inflation woes

By Lydia Chen  |   2008-6-19  |     ONLINE EDITION

SHANGHAI'S key stock index tumbled more than 6.5 percent today after the central bank governor said tackling inflation is still the top priority.

The remarks by Zhou Xiaochuan yesterday in the United States renewed investors' concerns that the government will step up measures to curb rising prices. Stocks also retreated after speculation eased that the government would intervene to support the slumping market.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, lost 6.54 percent, or 192.24 points, to 2,748.87 at 3pm. The plunge comes one day after the market jumped 5.5 percent.

Losers in the Shanghai market outnumbered gainers 789 to 17.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 7.43 percent, or 62.63 points, to 780.56.

Blue chips such as oil-related shares, lenders and airlines all dropped today.

PetroChina, the nation's biggest oil producer and biggest stock by market capitalization, slid 5.72 percent to 15.17 yuan (US$2.20) while Sinopec lost 3.38 percent to 12.57 yuan.

China National Petroleum Corp, PetroChina's parent, said its pretax profit fell by 40 percent to 47.5 billion yuan in the first five months of this year, National Business Daily reported, citing unnamed company officials.

China National paid 38.7 billion yuan in windfall taxes on oil sales during the period, triple the amount a year earlier, the newspaper said. The company's crude oil output rose 1.1 percent to 57.8 million tons, while crude processing volume increased 3.2 percent to 56.14 million tons, it said.

In mid afternoon trading on the New York Mercantile Exchange yesterday, light, sweet crude for July delivery climbed US$2 to US$136.01 a barrel. In London, August Brent crude increased US$1.91 to US$135.63 a barrel on the ICE Futures Exchange.