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Chinese investors look at an electronic board
showing share prices at a securities company in Shanghai June 6,
2005. (Newsphoto) |
The future of China's deeply troubled stock markets went from bad to
worse, slumping to fresh eight-year lows as regulators' plans to solve the
overhang of non-tradable government-owned shares heightened fears more
losses lie ahead.
The benchmark Shanghai Composite Index, which covers both A- and
B-shares listed on the Shanghai Stock Exchange, closed at a fresh
eight-year low Friday, down 2.43 points, or 0.24 percent, at 1,013.64.
It was the lowest close since February 24, 1997 after three consecutive
sessions of losses that saw the composite trim 3.8 percent of its value.
Dealers said they expect the index to fall through the key technical
mark of 1,000 points soon unless Beijing steps in with strong medicine to
cure broken investor confidence.
"The market has been falling for years and investors are numb," said
Zhang Qi, analyst from Haitong Securities.
"The key is to recover investors' confidence. There is more that the
government could do to better support investors in the market."
In April, Beijing tentatively moved to prop up the beleaguered
exchanges to not just halt the financial hemorrhaging but also as a first
stitch in a wound that has been festering for years.
The China Securities Regulatory Commission chose four companies under
which the non-tradable shares would be listed, and then announced this
week it would select 10 more.
But at both junctures,
anxious investors responded with more selling.
"The sentiment was so weak that the index has been falling
really fast. Some companies' stocks even lost all of last year's gains in
these several sessions," said Zhang.
It was not the first time that regulators sought a
solution to the parlous
overhang, in which of the 1,200 listed companies Beijing owns 66
percent of the 3.52 trillion yuan (US$425 billion) of market
capitalization.
Indeed it is these state holdings that has stopped cold the growth of
China's bourses, quite the opposite of what would be expected in an
economy that has been growing at more than eight percent for two decades.
Regulators first tried to resolve the overhang of state shares in 2001
to raise funding for China's fledgling social security system but panicked
investors sent stocks plunging, forcing authorities to abort the plan.
Since then, Beijing has repeatedly vowed to fix the problem but only
soiled the wound by constantly balking at private and institutional
investor demands that their interests be protected in any sale program.
The market last peaked at 2,245 points four years ago.
(Agencies) |