2008-02-22 23:25:45 Xinhua English
BEIJING, Feb. 23 -- New share issue alerts have struck terror in the hearts of investors, sending the Shanghai lead indicator down 3.47 percent on Friday, the largest one-day drop this month.
The benchmark Shanghai Composite Index shed 156.89 points to close at 4370.29, with 679 out of 910 stocks closing lower. The Shenzhen Component Index tumbled 3.72 percent to close at 16179.52. Turnover on the two bourses amounted to 162.2 billion yuan, up 7 percent from the day before.
Shares in Daqin Railway Co Ltd, the operator of China's biggest coal transport network, led the drop after it said it would issue shares to raise another 50 billion yuan. The stock closed at 20.37 yuan, down 8.07 percent.
Other large-caps followed. Oil producer Sinopec slid 5.75 percent to close at 16.87 yuan, though it denied rumors of a 60 billion yuan stock issue. Shanghai Pudong Development Bank (SPDB) plunged 13 percent over two days after it confirmed it would be issuing new shares.
Analysts said the rise in the supply of new scripts has had a negative impact on investors.
"The leak of information about SPDB made investors sensitive to the re-financing rumors," Yan Ji, investment director of HSBC Jintrust Fund Management Co Ltd, said.
"Many companies are seeking finance through the capital market as commercial banks take measures to rein in credit," Wu Feng, an analyst at TX Investment Consulting Co Ltd, said.
Capital raised through new share issues of listed companies from the beginning of this year totals 52 billion, up 258 percent from the same period last year. Non-tradable shares with a total market value of 500 billion yuan are expected to be traded in the first two months of this year.
"If Ping An, SPDB and Daqin Railway are added, the total scale of refinancing is expected to divert 800 billion yuan from the market," Wu said.
Meanwhile, market insiders told China Daily the China Securities Regulatory Commission on Friday approved the issue of four new equity funds. The four mutual funds are managed by ICBC Credit Suisse Asset Management Co Ltd, Soochow Asset Management Co Ltd, Chang Xin Asset Management Corporation Limited and Citic-Prudential Fund Management Co Ltd.
"The move is expected to ease liquidity pressure in the stock market," Wu said.
(Source: China Daily)