Shanghai shares drop 3.5% at midday
SHANGHAI’S key stock index followed the turmoil that hit global exchanges last week when it resumed trading this morning after a week-long holiday.
The Shanghai Composite Index dropped 3.5 percent, or 80.07 points, to 2,213.08 points at 11:30am.
Losers outnumbered gainers 703 to 112 while seven remained unchanged.
The Shenzhen Composite Index, which tracks the smaller domestic market, lost 2.90 percent, or 17.79 points, to 596.25 points.
Metal producers and coal makers led the market into negative territory in the early session.
Datong Coal Mine dropped the daily cap of 10 percent to finish the session at 15.90 yuan (US$2.33). Yunnan Copper Industry Co skipped 7.35 percent to 11.97 yuan. Shanxi Xishan Coal & Electricity Power Co retreated 9.05 percent to 11.45 yuan.
Blue chips in the banking sector also declined.
Industrial & Commercial Bank of China, the nation’s biggest lender and second-largest market heavyweight, lost 3.91 percent to 4.18 yuan.
Bank of Beijing Co was down 5.07 percent to 7.68 yuan. ING Groep NV wants to raise its stake in Bank of Beijing to 20 percent and may apply for a retail banking license in China, the Wall Street Journal reported, citing Philippe Damas, ING’s head of Asian retail and private banking.
The rejection by the United States House of Representatives of a US $700-billion bailout plan on September 29 sent stocks tumbling around the world. The House later passed a revised version of the plan to bolster the ailing US financial system, but stocks there continued to fall.
Last week, the Dow Jones Industrial Average ended 818 points lower, the biggest weekly point loss in seven years and the third-biggest weekly loss overall.
China has implemented measures to boost its sagging markets, including scrapping a stamp duty on stock purchases and ordering state firms to buy additional shares.
On the positive side this morning, securities brokerages seemed to have weathered the storm.
Haitong Securities, the country’s largest listed brokerage by market value, jumped 6.23 percent to 22.86 yuan while Guoyuan Securities also added 2.10 percent to 19.91 yuan.
China will soon start margin trading and short selling among securities companies, the China Securities Regulatory Commission said in a statement yesterday. The regulator will allow investors to sell shares that they don’t already own to create “internal price stability” within the local markets, it said.
Ping An Insurance (Group) Co, China’s second-largest insurer, added 2.51 percent to 33.90 yuan.
Ping An said yesterday it will post an impairment charge of 15.7 billion yuan in its third-quarter results on losses from its stake in Fortis, which is being rescued after pouring 24.2 billion euros ($33 billion) into the acquisition of ABN Amro Holding NV assets last year just as the US subprime-mortgage market collapsed and credit markets froze.
Ping An’s first-half profit fell 2.1 percent to 9.49 billion yuan after investment income plunged 64 percent as the nation’s stock market plummeted. The Chinese insurer in November paid 1.81 billion euros for a 4.2 percent stake in Fortis, Belgium’s biggest financial-services company.
BNP Paribas SA, France’s biggest bank, will take control of Fortis’s units in Belgium and Luxembourg after an earlier government rescue failed to ensure the company’s stability as the global credit crisis expanded.
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