China's shares closed at their lowest in a year yesterday, battered by weak sentiment exacerbated by fresh selling in bank stocks on the back of a huge planned bond issue by Shanghai Pudong Development Bank, brokers said.

An elderly Chinese man takes note while monitoring share prices at a securities company in Shanghai November 12, 2003. [Reuters]

The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, dropped 1.92 per cent to 1,317.792 points, the lowest close this year since the 1,319.868 level set on January 3.

The Shenzhen sub-index also fell 45.31 points, or 1.4 per cent, to end at 3,182.27 points yesterday.

"Pudong Development Bank's giant bond issue dealt another blow to the already poor market sentiment," said analyst Dai Yizhong at Guotai Junan Securities.

"As investor confidence has collapsed, we can see no immediate support for the Shanghai composite index."

Pudong bank, in which the world's largest financial services company, Citigroup, has a 4.62 per cent stake, said on Wednesday it plans to issue five-year convertible bonds worth 6 billion yuan (US$725 million) to help its expansion.

Pudong bank's shares skidded 4.47 per cent to 8.77 yuan (US$1.10) - a 21-month low - with investors worried the bond issue will lead to a dilution of the lender's earnings over the next few years, brokers said.

Index heavyweight China Merchants Bank Co Ltd's shares have fallen 11.6 per cent since August 26, when it announced a plan to issue 10 billion yuan (US$1.2 billion) in convertible bonds, the largest ever single issue of the investment tool in China.

It closed down 3.63 per cent at 9.29 yuan (US$1.10), in line with falls in other bank stocks.

Minsheng Bank declined 4.51 per cent to 8.26 yuan (98 US cents), Huaxia Bank lost 4.47 per cent to 6.41 yuan (77 US cents) and Shenzhen Development Bank fell 2.37 per cent to 7.82 yuan (94 US cents).

The Shanghai composite index has fallen 2.94 per cent since the start of 2003, making China the worst performing stock market in Asia for the year.

The index provisionally ended at a year low of 1,318.656 points.

It has fallen 19 per cent since mid-April, versus a rise of roughly 40 per cent in neighbouring Hong Kong, after being hit by a slew of factors including too many stock offers and a government-ordered tightening of bank loans, which have thinned market funds.

In the futures market, Shanghai copper futures traded higher yesterday, following healthy gains on the London Metal Exchange which went some way to restoring confidence in a recently volatile market, traders said.

Shanghai's most active May contracts rose 210 yuan (US$25) to 21,500 yuan (US$2,597), while all other contracts finished up between 140 yuan (US$17) and 300 yuan (US$36). Volume dropped to 185,288 lots from Tuesday's considerable 274,022 lots.

"Shanghai copper was positive today on the strength of LME's overnight rise," one trader said. "I think the market is going to look good... in the future."

LME three-month copper closed Tuesday's session up a steep US$30 at US$2,073, and it continued its healthy performance in Wednesday's Asian trade to be quoted at US$2,076/2,080 a ton by 0139 GMT.

Shanghai's spot copper gained 320 yuan (US$39) to 340 yuan (US$41) to move in a range between 21,410 yuan (US$2,590) and 21,470 yuan (US$2,590) a ton yesterday.

Shanghai's aluminium futures were mixed yesterday with most contracts losing 10 yuan (US$1.2) to 80 yuan (US$9.70), while some increased by 20 yuan (US$2.40) to 150 yuan (US$18) as volume fell to 19,770 lots from 24,520 on Tuesday.

LME aluminium was quoted US$2 down from Tuesday's close at US$1,509/US$1,513 a ton in yesterday's Asian trade.

Close

Today's Top News		Top Business News
+Official: Taiwan pushed to brink of danger ( 2003-11-12) +Child kidnap gang crushed in Shenzhen ( 2003-11-13) +Shanghai eyes 2nd Disney park for China ( 2003-11-13) +Construction dates set for Olympic venues ( 2003-11-13) +FDI falls for fifth straight month ( 2003-11-13)		+Weak sentiment drives Shanghai to year low ( 2003-11-13) +FDI falls for fifth straight month ( 2003-11-13) +China's money supply grows fast ( 2003-11-12) +China committed to sustainable development ( 2003-11-12) +RMB loan growth declines ( 2003-11-13)