Market closes lower at midday as blue chips drop

By Lydia Chen  |   2008-7-1  |     ONLINE EDITION

SHANGHAI shares ended lower this morning as the key stock index closed nearly 2 percent lower after crude oil climbed to a record and manufacturing expanded at the slowest pace in almost three years.

The Shanghai Composite Index lost 1.82 percent, or 49.81 points, to 2,686.29 at 11:30am.

Losers in the Shanghai market outnumbered gainers 628 to 172 while 13 were unchanged.

The index dropped more than 48 percent this year, making it the worst-performing stock market in the world.

The Shenzhen Composite Index, which tracks the smaller domestic stock exchange, was down 1.40 percent, or 11.11 points, to 782.02.

China Petroleum & Chemical Corp, or known as Sinopec, the nation's largest refiner, decreased on concern higher crude costs will erode profit.

Sinopec buckled 2.27 percent to 9.92 yuan (US$1.45) while PetroChina, the nation's largest oil producer and the biggest stock by market capitalization, shed 1 percent to 14.79 yuan.

Crude prices rose to a record US$143.67 a barrel in New York yesterday on concern Israel will attack Iran over its nuclear program and disrupt oil supplies. Oil has climbed 47 percent this year and was recently at US$140.62.

Citic Securities Co fell after the parent of the nation's largest insurer cut its stake in the brokerage.

Citic Securities, the country's most profitable brokerage, fell 4.60 percent to 22.82 yuan while Haitong Securities Co, China's largest brokerage by market value, also lost 4.76 percent to 23.79 yuan.

Haitong has fallen 13 percent this year, compared with a 49 percent drop for rival Citic Securities Co.

Citic said in a statement yesterday that China Life has been cutting its holdings, without elaborating.

Haitong's fall came after China Minsheng Banking Corp failed to sell 269 million shares in Haitong at a floor price of 11.68 yuan apiece yesterday as potential bidders were unable to come up with enough cash at two weeks' notice, according to the auctioneer.