Stocks see second day of tumble

By Ding Yining  |   2008-8-6  |     NEWSPAPER EDITION

SHANGHAI stocks yesterday continued Monday's tumble despite an announcement by the central bank of favorable credit policies to help small and medium enterprises.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, sank 1.86 percent, or 50.99 points, to end at 2,690.75.

Losers outnumbered gainers 750 to 117 while 40 stocks were unchanged. Turnover totaled 42.51 billion yuan (US$6.2 billion).

Shares opened on an upbeat note in the morning after global crude oil price dropped US$3.69. The price later rose over concerns about inflation and an economic recession.

"Investors don't have much confidence in the market in spite of the central bank's favorable policy to support the financing of small and medium enterprises. We are cautious about the market's trend as listed companies are lowering their profit forecast,'' said Huatai Securities in a research note.

China International Capital Co Ltd and Goldman, Sachs & Co both forecast a lower consumer price index but a higher producers price index in July, which means profits of manufacturers will be further squeezed.

Real estate developers fell after Shenzhen-listed China Vanke Co, the country's largest publicly traded developer, announced a slower growth in profit. Chairman Wang Shi said the economic situation in the second half will be more adverse than expected.

Shanghai-listed Gemdal Co slid 4.77 percent to 7.79 yuan and Poly Real Estate Group dived 7.11 percent to 14.51 yuan.

"The market is still waiting for further good news related to the macroeconomic adjustment,'' said Wu Kongyin, an analyst with Lianhe Securities. ''The index is likely to fluctuate from 2,650 to 2,950 points in the coming days.''

Among gainers, Haitong Securities Co added 0.17 percent to 22.96 yuan after it got regulatory approval to invest in private equities.

China Petroleum and Chemical Corp, or Sinopec, the country's biggest oil refiner, is seeking to buy London-listed Imperial Energy of Russia for US$2.5 billion. Sinopec's shares gained 0.81 percent to end at 11.22 yuan.