Market remains lukewarm at midday despite interest rate cuts

By Ding Yining  |   2008-12-23  |     ONLINE EDITION

SHANGHAI'S key stock index dropped nearly 3 percent in the morning despite rate cuts announced by the central bank late yesterday.

The benchmark Shanghai Composite Index tumbled 2.94 percent, or 58.46 points, to close at 1,929.28 points as of 11:30AM. Turnover was 35.2 billion yuan (US$5.14 billion). Losers outnumbered gainers 793 to 77 with 38 remained unchanged.

The Shenzhen Composite Index, which tracks the smaller domestic market, slid 3.38 percent to close at 600.80 points.

China's central bank cut interest rates late yesterday for the fifth time in three months, slashing the one-year lending rate to 5.31 percent, down 0.27 percentage point, and the deposit rate to 2.25 percent. The rate cuts were lower than previous estimates of 54 percentage point.

Heavyweights led the plunge in the first half of trading. China Petroleum & Chemical Corp, Asia's largest refiner and also known as Sinopec, dropped 4.04 percent to 7.37 yuan. PertroChina, the biggest index component, lowered 2.56 percent to 10.64 yuan.

China Life Insurance Co., the nation's largest insurer by market value, sank 3.10 percent to 19.69 yuan.

China Cosco Holdings Co tumbled 5.39 percent to 8.25 yuan. The company said it may issue 10 billion yuan of domestic notes in order to provide operating capital.

China Railway Group Ltd said it has won rail line construction contracts worth a total of 7.9 billion yuan. Nonetheless, its share price dipped 0.30 percent to close at 9.94 yuan.

Industrial Bank Co said it plans to sell as much as 18 billion yuan of domestic bonds to bolster capital. Its shares sank 4.21 percent to 15.70 yuan.

Real estate developers continued yesterday's fall. Gemdale Corporation shed 6.99 percent to 7.32 yuan. China Merchants Property Development Co Ltd fell 5.97 percent to 13.85 yuan.