A sharp fall in the US market further weakened investor sentiment yesterday, dragging down the benchmark index nearly 2 percent to its lowest level in three months.
Turnover on the mainland's two bourses shrank 10 percent yesterday to 78.57 billion yuan from the day before, as many investors sold stocks in anticipation of a downward trend, analysts said.
The Shanghai Composite Index dropped 1.97 percent, or 97.74 points, to close at 4861.11. Losers outnumbered gainers 533 to 293. The Shenzhen Component Index fell 2.34 percent to close at 15861.01, while the Hang Seng Index slipped 1.51 percent.
"The continuing slide of PetroChina and other large-caps shows major market players are unwilling to enter the market," said Qin Hong, an analyst at the Bohai Investment Research Institute.
PetroChina continued to fall, shedding 3.58 percent to close at 32.55 yuan yesterday. It has lost 26 percent in the past three weeks.
Ping An of China plunged 4.68 percent to close at 100.98 yuan, and China Life slipped 4.12 percent to close at 53.51 yuan. China Merchants Bank tumbled 1.85 percent to close at 37.57 yuan.
The gloomy mood was reflected in poor sales of mutual funds, the darlings of investors only a few months ago. "Some newly issued mutual funds have failed to meet their original targets because of a poor response from potential subscribers," said Zhang Fan, an analyst at Changjiang Securities. Many older funds were forced to sell shares to meet rising demand for redemption by investors, he said.
Zhang added that the return on a mutual fund with assets of about 10 billion yuan amounted to an average of 100 million a day.
According to a consulting firm's recent survey of 27 fund managers, around 50 percent of respondents said they had reduced their stock holdings in November.
Most of them said they expected the market to fluctuate in the short term, but were positive on stocks in the real estate and financial sectors.
"PetroChina has become something of a signal for the market; its movement will trigger other stocks to follow its direction," said Zhang.
"The market is not expected to rebound until there are strong purchases of large-caps and an obvious strong performance in certain sectors," said Qin.
(China Daily November 28, 2007)