Shanghai market sinks 6.32% on profit concerns

By Lydia Chen  |   2008-10-27  |     ONLINE EDITION

SHANGHAI’S key stock index tanked more than 6 percent today on concern a slowing economy will hurt corporate profits.

The Shanghai Composite Index lost 6.32 percent, or 116.27 points, to 1,723.35 points at 3pm.

Losers outnumbered gainers 789 to 28.

The Shenzhen Composite Index, which tracks the smaller domestic market, was down 6.49 percent, or 32.83 points, to 472.99 points.

The index is down nearly 66 percent this year, making it the worst performing market in Asia, as concerns that a global recession will reduce demand for China-made goods.

Third-quarter profits declined an average of 17 percent from the previous three months, Shanghai Securities News reported today, citing figures from the 645 companies that have reported earnings as of yesterday.

Aluminum Corp of China Ltd, the country's largest producer of the metal, declined the daily cap of 10 percent to 5.91 yuan (86 US cents). The company, known as Chalco, said its third-quarter earnings slumped 93 percent to 182.9 million yuan from a year earlier as metal prices fell and slowing economic growth hurt demand.

China Shenhua Energy Co led coal miners down.

Shenhua, the country’s biggest coal producer, sank 10 percent to close at 17.15 yuan. Pingdingshan Tianan Coal Mining Co, which operates mines inHenan province, also fell 10 percent to 11.22 yuan.

Yanzhou Coal Mining Co, China's fourth-biggest producer of the fuel, expects to almost triple full-year profit on rising coal prices. Third-quarter profit quadrupled to 2.88 billion yuan, it said. However, the company’s shares tumbled 9.70 percent to 7.91 yuan.

Power-station coal prices at Australia's Newcastle port, a benchmark for Asia, dropped 8.3 percent to US$96 a metric ton in the week ended October 24, according to the global COAL NEWC Index. That was the first fall below US$100 a ton since January 25.