Chinese shares fall 3.52 percent in morning session

October 6th, 2008 - 1:18 pm ICT by IANS  

Beijing, Oct 6 (Xinhua) Chinese shares fell by over three percent in the morning session Monday on worries about the financial crisis and after big losses on Wall Street. The benchmark Shanghai Composite Index was trading midday at 2,213.08, down 80.7 points, or 3.52 percent, while the Shenzhen Component Index fell 263.62 points, or 3.49 percent, to 7,295.65.

Banking shares fell across the board, with the Industrial and Commercial Bank of China, the country’s largest lender, shedding 3.91 percent to 4.18 yuan. China Merchants Bank fell 6.7 percent to 16.44 yuan and Bank of Communications lost 5.85 percent to 5.63 yuan.

However, brokerage companies saw gains after news Sunday that China Securities Regulatory Commission would soon launch the margin trading business for securities firms.

Haitong Securities rose 6.23 percent to 22.86 yuan, Guojin Securities gained 2.57 percent to 33.17 yuan, while Guoyuan Securities was up 2.1 percent to 19.91 yuan.

Margin trading, which allows traders to borrow part of the money necessary to buy a security, would change current one-way trading on both the Shanghai and Shenzhen stock markets and serve as a risk aversion tool for investors.

The move was good for securities companies, however, a stronger upward momentum of the stock market depends on the performance of peripheral markets, especially the US market, said He Qiang, professor at the Central University of Finance and Economics in Beijing.

Steel makers and coal producer shares dropped as investors worried falling steel and coal prices may erode their earnings, analysts said.

Baosteel, the country’s largest steel maker, plummetted 7.43 percent to 6.73 yuan. The Angang Steel Co., a leading domestic steel maker, was down 8.52 percent to 8.05 yuan.

China Shenhua, the country’s top coal producer, sank 9.46 percent to 24.8 yuan and Yanzhou Coal Mining Company lost 8.31 percent to 11.81 yuan.

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