Eq­ui­ties slump on liq­uid­ity con­cerns

China Daily (Canada) - - BUSINESS - By GAO CHANGXIN in Shang­hai gaochangxin@chi­nadaily.com.cn

Chi­nese shares hit a seven-week low on Thurs­day amid fears that new list­ings will drain mar­ket liq­uid­ity and property con­cerns will over­shadow eco­nomic growth.

The bench­mark Shang­hai Com­pos­ite In­dex lost 1.55 per­cent to 2,023.7 points, the big­gest one-day drop since April 28, even as the bourse restarted ini­tial pub­lic of­fer­ings af­ter a four­month hia­tus. Xin­jiang Qin­song Ce­ment (Group) Co Ltd, a ce­ment pro­ducer, lost 8.06 per­cent, leading the 3.51 per­cent drop in the ce­ment in­dus­try. Yonyou Soft­ware Co Ltd dropped by the daily limit of 10 per­cent, mir­ror­ing the over­all weak sen­ti­ment for tech­nol­ogy shares.

Property de­vel­op­ers



lan­guish and lost an aver­age of 2.02 per­cent on Thurs­day, led by in­dus­try leader China Vanke Co, af­ter of­fi­cial data pub­lished on Wed­nes­day showed that China’s home prices fell for the first time in two years in­May.

Guizhou Guochuang En­ergy Hold­ing Group Co Ltd slumped 4.85 per­cent af­ter reporting on Wed­nes­day night that it was be­ing in­ves­ti­gated by the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion for po­ten­tial vi­o­la­tion of Chi­nese se­cu­rity laws. Guochuang is the fourth pub­lic com­pany in­ves­ti­gated by the com­mis­sion since March 17.

“The restart of IPOs, com­bined with tax and div­i­dend pay­ments, has drained liq­uid­ity from the mar­ket,” said Sun Bin­bin, an an­a­lyst with Chi­naMer­chant Se­cu­ri­ties.

The CSI 300 In­dex of the big­gest com­pa­nies in Shang­hai and Shen­zhen lost 1.5 per­cent on Thurs­day, while the ChiNext In­dex of growth en­ter­prises de­clined 3.2 per­cent, the most sinceMarch 27.

Zhe­jiang Sha­puaisi Phar­ma­ceu­ti­cal Co is­sued shares on Thurs­day at 21.85 yuan a share, 14.1 times its earn­ings per share last year. The price-earn­ings ra­tio is less than half of the in­dus­try aver­age of 33.5 times, un­der­lin­ing the CSRC’s ef­fort to cap un­rea­son­ably high is­sue prices.

The rest of the com­pa­nies that is­sued shares af­ter the IPO gates re­opened in­clude Guang­dong Elling­ton Elec­tron­ics Tech­nol­ogy Co, Wuxi Xue­lang En­vi­ron­men­tal Tech­nol­ogy Co Ltd and Shang­hai Lian­ming Ma­chin­ery Co Ltd.

The lat­est property data had in­vestors wor­ried that China’s eco­nomic growth might slow fur­ther, drag­ging the stock mar­ket with it, af­ter first-quar­ter GDP growth de­cel­er­ated to an 18-month low of 7.4 per­cent.

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