Chinese shares dive on tightened monetary concerns

2008-07-15 09:43:38 GMT       2008-07-15 17:43:38 (Beijing Time)       Xinhua English

BEIJING, July 15 (Xinhua) -- Chinese shares dived on Tuesday as concerns over tightened monetary policies dragged down financial, real estate, insurance and banking stocks, analyst said.

The benchmark Shanghai Composite Index fell 3.43 percent, or 98.81points, to end at 2,779.45.

The Shenzhen Component Index closed at 9,649.02 points, down 405.26 points, or 4.03 percent.

Banks and property developers led the downturn amid fears the government would further tighten money supply to tame inflation and curb excessive investment, said a market analyst.

Poly Real Estate Group plummeted by the daily limit of 10 percent, or 1.68 yuan (24 U.S. cents), to 15.12 yuan. Shares of Gemdale Group lost 10 percent, or 1 yuan, to close at 8.98 yuan.

Pudong Development Bank dropped 7.11 percent, or 1.67 yuan, to 21.83 yuan. China Merchants Bank, Bank of China, Industrial and Commercial Bank of China were down by more than three points to 22.94 yuan, 4.06 yuan and 4.88 percent respectively.

China Ping An, the country's leading insurer, saw its shares fall 6 percent, or 2.59 yuan, to 40.61 yuan. Another major insurer, China Life, shed 6.04 percent, or 1.53 yuan, to close at 23.81 yuan.

Forestry shares, however, gained in Tuesday trading, boosted by the government's move to promote a household contract system in the management of collective forestry land and ownership of wood. This was seen as an important reform to boost the enthusiasm of farmers and increase their income.

In the reform, production and management of forestry would be entrusted to farmers through 70-year contracts, while the nature of collective ownership should remain unchanged, according to a State Council statement on Monday.

Yongan Forestry shares rose by the daily limit to close at 8.69yuan, while Yunnan-based Jinggu Forestry Co. Ltd. gained 8.88 percent to close at 10.05 yuan.

The Hushen 300 Index, which reflects both exchanges, closed at 2,852.98, down 122.90 points, or 4.13 percent, from the previous close.

Aggregate turnover on the two bourses totaled 117.8 billion yuan, up from 93.50 billion yuan on the previous trading day.

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