Chinese shares fall on economic slowdown fear

October 27th, 2008 - 6:06 pm ICT by IANS  

Beijing, Oct 27 (Xinhua) Chinese shares dropped 6.32 percent Monday amid concerns over a global economic slowdown. The benchmark Shanghai Composite Index dropped 6.32 percent, or 116.27 points, to close at 1,723.35. The Shenzhen index slid 6.89 percent, or 424.14 points, to close at 5,734.81 points.

The combined turnover was about 47.18 billion yuan ($6.9 billion), compared with the previous trading day’s 44 billion yuan. Losses outnumbered gains by 842 to 28 in Shanghai and 723 to 23 in Shenzhen.

Almost all sectors fell. Tourism, coal, oil and property sectors led in the widespread fall. Nearly 600 stocks dropped by the daily limit of 10 percent.

Investors were increasingly worried about the impact of the global financial turmoil on the real economy. The huge drop in the Hong Kong market Monday and the pessimistic expectations of third quarter profits were behind the fall, said Cheng Weiqing, chief analyst at CITIC Securities.

Hong Kong stocks nosedived 1,602.54 points, or 12.7 percent, to close at 11,015.84 Monday, the lowest level in more than four years, as investors dumped shares on continued worries about the global economy.

National economic growth had dipped to 9.9 percent in the first three quarters, 2.3 percentage points lower than the same period last year, and this announcement came before third quarter reports, further dampening market sentiment, he said.

On Friday, US and European markets suffered heavy losses, with Wall Street’s Dow Jones index down 3.59 percent, adding to investor worries.

Despite measures to stimulate growth, including interest rate cuts and export tax rebate rises, the market would not recover in the short term as investor confidence was weak, said Huang Xuejun, an analyst at Everbright Securities.

The development of the financial crisis and its impact on the real economy would be key factors in market prospects, said Huang.

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