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China stocks continued to decline yesterday despite a minor rise in the morning, as dismal Asian regional markets inflicted pain on mainland markets, brokers said.
Shanghai's B-share index edged down 0.187 point, or 0.12 per cent, at 153.681 points, while Shenzhen's also decreased 0.12 points, or 0.05 per cent, to 246.17.
Hard currency B shares are available to foreign investors.
Turnover was meagre at US$16.36 million on the Shanghai's B-share market, and HK$69.47 million (US$8.9 million) in Shenzhen.
Shanghai's composite index also inched down 1.461 points, or 0.09 per cent, to 1,672.4, while Shenzhen's sub-index decreased 8.16 points, or 0.24 per cent, to close at 3,425.82.
The indices had staged a weak comeback in morning trade after declines in the previous two days as domestic investors, who usually ignore overseas equity trends, took their cue from Wall Street's slide toward five-year lows.
But the impact on Asian markets made investors shy away from China's bourses in the afternoon.
"Heavy losses in Asian regional markets, including a more than 3 per cent plunge in Hong Kong's Hang Seng index, were too much for domestic investors to bear," said a senior trader at a major Chinese brokerage.
"The impact was mainly psychological but it deterred buying and made trade very dull," he said.
Asia's agony followed another fall on Wall Street on Tuesday, as the Dow Jones Industrial Average slid 1.06 per cent and the technology-heavy NASDAQ fell 4.18 per cent, battered by jitters over corporate earnings downgrades and accounting scandals.
Despite yesterday's fall, official market-friendly policies were likely to keep China's indices stable in the short run, brokers said.
The government has announced a series of steps to boost domestic bourses this year, including the abolition of an unpopular scheme to sell huge State holdings in listed companies that had fanned worries of a liquidity crunch.
Such market-boosting steps have kept China's indices among the world's best performers over the past month, brokers said.
China's benchmark Shanghai composite index, which covers B shares and yuan-denominated A shares reserved for domestic investors, has surged 7.02 per cent since June 23, the day the government announced it was abandoning the scheme.
"As the government is determined to support the market, share indices will lack momentum to fall sharply," said analyst Hu Zhiguang of China Securities.
Brokers said the composite index was likely to move steadily between 1,650 and 1,700 in the near term, or around one per cent in either direction from yesterday's closing level.
While there were no outstanding movers on B-share markets yesterday, large-cap companies were relatively active on domestic A-share markets, brokers said.
Market heavyweight Baoshan Iron and Steel Co - the listed arm of China's steel giant Shanghai Baosteel Group Crop - bucked the market downtrend to end up 0.23 per cent at 4.44 yuan, buoyed by news a subsidiary plans a Sino-foreign fund venture.
Fortune Trust and Investment Co, Baosteel's trust unit, signed a deal with the asset management arm of French bank Societe Generale on Tuesday to establish what they hope will be one of the country's first foreign fund management ventures.
Shenzhen's A-share index fell 0.37 per cent to 518.11 points, and Shanghai's slid 0.09 per cent to 1,745.027.
(China Daily July 25, 2002)
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