SHANGHAI: The mainland stock market slid 4.13 percent yesterday, led by financial companies and real estate developers, amid investor concerns about sliding corporate earnings.
The benchmark Shanghai Composite Index fell 154.35 points to close at 3579.15, with 775 out of 914 stocks closing lower. The Shenzhen Component Index shed 5.28 percent, or 723.37 points, to close at 12979.19.
The turnover on two bourses amounted to 192 billion yuan, down 9 percent from Tuesday. The total capitalization dropped 8 percent to 23.2 trillion yuan.
Analysts said the high inflation and negative expectations of corporate earnings have led to some institutional investors selling stocks of mainland companies both in Hong Kong and the mainland markets.
The Hang Seng China Enterprises Index tumbled 3.64 percent to close at 14188.31 yesterday. "The fall of H shares of mainland companies had a chain effect on their A-share counterparts, which are mainly large-caps that weigh heavily on the major stock indicator," said Zhu Haibin, an analyst at Essence Securities.
Financial companies led the plunge on the mainland yesterday. Ping An Insurance dived 8.07 percent and China Life plummeted 8.02 percent. Bank of Communications sunk 5 percent.
Stockbrokers fell sharply as a technical correction after the outstanding performance in recent weeks. Sinolink Securities fell to the daily limits to close at 3.04 yuan, after soaring as much as 60 percent in the past two weeks. Northeast Securities slid 9 percent.
"The uncertainties about the timing of the launch of margin trading services for mainland stockbrokers and the unclear market trend made investors jumpy," said Wu Feng, an analyst at TX Investment Consulting Co Ltd.
In addition, soon after the government introduced new block trading rules to mitigate the impact of large amounts of freed up shares after their lock-in period, several companies violated the rules, which dampened investor sentiments.
The Shanghai Stock Exchange yesterday came down hard on Sinopec's Shanghai branch by banning its stock trading for three months from today. Sinopec Shanghai sold 1.55 percent of Shanghai Kaikai Industrial Co Ltd in the past two weeks.
Source:China Daily
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