Chinese shares down owing to IPO worries
AFP April 22, 2014, 2:53 am TWN
SHANGHAI--Chinese stocks tumbled 1.52 percent Monday on fears of a possible market glut after authorities revealed a list of several firms planning initial public offerings (IPOs).
The benchmark Shanghai Composite Index dropped 31.92 points to 2,065.83 on turnover of 81.7 billion yuan (US$13.1 billion).
The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.34 percent, or 14.58 points, to 1,074.78 on turnover of 92.3 billion yuan.
Hong Kong was closed Monday for a public holiday.
Beijing in January ended a 14-month moratorium ban on IPOs, leading to the listing of dozens of firms, but that was stopped in March to allow officials to close loopholes in new rules.
But on Friday the country's stock regulator said 28 firms had filed to launch IPOs, state media reported, fuelling worries the new listings will soak up investors' cash at a time of already high anxiety about liquidity in financial markets.
"The news indicated the window was open for IPO review, leading to panic in the market," Zheshang Securities analyst Zhang Yanbing told AFP.
And Deng Wenyuan, an analyst at Soochow Securities, told Dow Jones Newswires: "Investors remain conservative due to concerns about a share glut from upcoming IPOs as well as from the slowdown in the economy."
However, analysts said the downside may be limited as hopes for government moves to boost growth may offer some support in the medium term.
Beijing last week released data showing the world's number two economy expanded 7.4 percent year on year in January-March, sharply down from the 7.7 percent seen in the previous three months.
Citic Securities declined 3.9 percent to 11.40 yuan and Founder Securities slipped 1.8 percent to 5.93 yuan.
But defence stocks and financial plays were the biggest laggards on the market.
Shaanxi Aerospace Power Hi-Tech lost 4.78 percent to 17.95 yuan while Jiangxi Hongdu Aviation Industry dropped 4.31 percent to 15.97 yuan.
Sinolink Securities tumbled 5.37 percent to 19.74 yuan while Industrial Bank shed 1.79 percent to 9.90 yuan.
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