Market slumps further after bleak forecast

By Pan Xiaoyi  |   2008-12-30  |     ONLINE EDITION

SHANGHAI'S key stock index extended the losses today for a seventh straight day, marking its longest losing streak since June, after an economist said economy will not recover in the short term.

The Shanghai Composite Index dropped 0.95 percent, or 17.57 points, to 1832.91 points.

Losers outnumbered gainers 590 to 252 while 32 remained unchanged. Turnover in the local market almost remained the same, edging up to 37.9 billion yuan (US$5.6 billion) from 37.1 billion on the previous trading day.

The Shenzhen Composite Index, which tracks the smaller domestic market, was down 0.84 percent, or 4.74 points, to 560.42 points.

"China?ˉs producer prices may decline in the first half of next year," said Fan Jianping, chief economist at the State Information Center under the National Development and Reform Commission. "There's not enough evidence to show the economy will recover in the short term," Fan was cited as saying.

Steal producers led the declines with Tangshan Iron & Steel Co and Chengde Xinxin Vanadium & Titanium Co plunging by a 10 percent daily cap to 4.1 yuan and 4.95 yuan respectively. Handan Iron & Steel Co slumped 8.78 percent to 3.43 yuan.

Tangshan Iron & Steel Co, Handan Iron & Steel Co, and Chengde Xinxin Vanadium & Titanium Co, the three steelmakers will merge into one publicly traded company through a share swap, Tangshan Steel said in a statement late yesterday. After the merger, Tangshan Steel will remain as the only publicly traded unit controlled by Hebei Steel Group.

China Eastern Airlines Corp, the nation's third-largest carrier by fleet size, retreated 3.65 percent to 4.49 yuan after expanding a discounted sale of new shares to its parent.

The carrier will raise a total of 7 billion yuan (US$1.02 billion) by selling shares to its parent, China Eastern Air Holding Co, it said in a statement to the Shanghai Stock Exchange yesterday.

The airlines also said it more than doubled the financial aid it has secured from the government.

Bucking the downward trend, Beiqi Foton Motor Co, China's biggest maker of commercial vehicles, rose as much as 9.71 percent to 4.8 yuan after winning an order for 450 hybrid busses from the Beijing government to be delivered in 2009. The stock has declined 64 percent this year.

Huadian Power International Corp, the listed unit of China's fourth-largest power producer, gained 3.03 percent to 3.74 yuan after it said its board approved the purchase of a 100 percent stake in Hebei Huarui Energy Co from 12 Chinese individuals for 729 million yuan.

Huaxia Bank Co, the Chinese lender partly owned by Deutsche Bank AG, said it plans to nominate President Wu Jian as chairman, replacing Zhai Hongxiang, who will retire. The stock edged down 1.96 percent, to 7.52 yuan.