Black Friday plunges blue chips into the red

By Zhu Shenshen  |   2008-6-28  |     NEWSPAPER EDITION

SHANGHAI'S key stock index plunged about 5.3 percent yesterday, spurred by weak overseas markets, speculation on interest rate rises and new initial public offerings, which will siphon capital from the market.

The Shanghai Composite Index lost 5.29 percent, or 153.42 points, to 2,748.43 yesterday. The index lost 2.94 percent this week.

Trade volume was 61.72 billion yuan (US$8.94 billion) yesterday compared with 69.18 billion yuan in the previous session.

Losers in the Shanghai market outnumbered winners 745 to 33.

The Shenzhen Composite Index, which tracks the smaller market on China's mainland, was down 6.02 percent.

"The drop is natural with the IPO news and it being another 'sensitive' Friday (China often announces tightening policies at weekends)," said Sheng Xin, a Qilu Securities analyst.

Consumer prices rose 7.7 percent in May, down from April's 8.5 percent, which was the fastest in almost 12 years.

Central bank Governor Zhou Xiaochuan said last week the bank may formulate "stronger policies" to tackle price increases.

The Hang Seng Index fell for a sixth day in seven, losing 413.32 points or 1.8 percent to 22,042.35, its lowest since March 20. For the week, the index lost 3.1 percent.

On Thursday night, the Dow Jones Industrial Average plummeted more than 3 percent to its lowest level in nearly two years amid inflation worries and negative news from financial and automotive sectors. It was down another 0.5 percent soon after last night's opening.

Crude oil reached US$140.39 dollars a barrel on Thursday night and is expected to hit between US$150 and US$170 this summer.

Blue chips, from banks and properties to oil firms, led the decline in Shanghai yesterday.

Pudong Bank slid 6.28 percent to 22.99 yuan and Industrial and Commercial Bank of China, the country's biggest lender, fell 3.09 percent to 5.01 yuan.