Slowdown fears push market down 2%

By Ding Yining  |   2008-12-12  |     NEWSPAPER EDITION

SHANGHAI'S key stock index fell more than 2 percent yesterday after economic statistics for November were announced.

The benchmark Shanghai Composite Index dropped 2.28 percent, or 47.44 points, to close at 2,031.68 points.

Turnover was 89.8 billion yuan (US$13.1 billion), compared to Wednesday's 93 billion yuan.

Losers outnumbered gainers 720 to 141 and 46 remained unchanged.

November's Consumer Price Index added 2.4 percent from the same period last year, the lowest figure in 21 months, according to the National Bureau of Statistics.

China's exports in November fell 2.2 percent from the year before while imports dropped 17.9 percent, more than predicted.

"If exports continued to fall, China will face more severe economic slowdown than we had previously estimated," said Wang Jianhui, an analyst with Southwest Securites.

Banks suffered major losses. The Industrial and Commercial Bank of China fell 2.70 percent to 3.97 yuan. China Construction Bank lost 3.10 percent to 4.37 yuan. Shanghai Pudong Development Bank decreased 3.69 percent to close at 14.86 yuan.

China Petroleum and Chemical Corp, Asia's largest refiner and also known as Sinopec, dropped 3.32 percent to 8.16 yuan.

China Pacific Insurance (Group) Co Ltd was down 2.40 percent to 12.21 yuan.

"A lack of liquidity and worse-than-expected statistics may put the market in further fluctuation and we suggest investors be careful," said a research note by Industrial Securities.

Both China Eastern Airlines and China Southern Airlines surged yesterday after they announced on Wednesday in separate statements that they were to receive capital injections from the central government.

China Eastern will sell 652 million shares to its holding group China Eastern Airlines Group to raise 2.35 billion yuan and China Southern will raise 2.28 billion yuan by issuing 721 million shares.