Shanghai stocks fell for an eighth straight session yesterday, with its main index tumbling another 3 percent as worries that inflation may trigger more credit tightening continue. As much as US$2 trillion in value has been erased from the mainland's two bourses this year.
The benchmark Shanghai Composite Index fell to 2,868.80, closing the week down 13.84 percent. This was the worst weekly performance in almost 12 years and there were only four trading days owing to the Monday Dragon Boat Festival holiday.
The smaller Shenzhen Composite Index yesterday closed at 855.804, down 3.9 percent.
"It's rare to have an eight-day losing spree and we have only seen this twice before - in 1995 and 2001," said GF Securities analyst Wan Bing. "So you can see how weak the market is now."
This week's tumble came after the central bank told lenders to set aside a record amount in reserves to curb liquidity and inflation.
Adding fuel to the fire have been high oil prices, weak global markets and concern that tightening measures will hurt corporate earnings.
The Shanghai index is now more than 53 percent below its peak of last October and analysts said there's still a big chance the decline will extend.
PetroChina Co, the biggest weighting in the index, fell 2.47 percent to a new closing low of 14.99 yuan (US$2.17).
Brokerage stocks, which soared on Wednesday over speculation that China will soon introduce margin trading, fell yesterday amid concern over the weak market. Haitong Securities Co was down 10 percent at 24.12 yuan, while Citic Securities Co fell 7.77 percent to 27.52 yuan.
Shares in some airport operators and airlines rose after the mainland and Taiwan signed landmark tourism deals yesterday. Xiamen International Airport Co soared as much as 8.95 percent to 19.47 yuan before retreating to close at 18.08 yuan. Shanghai Airlines Co rose 1.27 percent to 6.40 yuan.
But analysts said the news didn't boost the broad airline sector because of rising fuel prices. China Eastern Airlines Corp shed 5.13 percent to 7.96 yuan and Air China Ltd lost 3.17 percent to 9.79 yuan.
Jinan Iron & Steel Co gained 2.42 percent to 12.72 yuan after first-half earnings rose more than 50 percent.
(Shanghai Daily June 14, 2008)