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China shares plummet in Olympic sell-off
2008-08-08
SHANGHAI (AFP) - Chinese share prices plummeted 4.47 percent on Friday as investors dumped Olympics-related stocks just hours before the opening of the Beijing Games, dealers said. Officials had previously declared that a stable stock market was a top priority ahead of the Games, but investors finally lost patience when the opening day of the event arrived and they saw no concrete measures, analysts said. The benchmark Shanghai Composite Index, which covers both A and B shares, shed 121.86 points to 2,605.72 on turnover of 46.3 billion yuan (6.8 billion dollars). The index sank to a 19-month low, and analysts believe it may slide further despite officials' campaign of words, including editorials in major state media, saying they wanted to stabilise the market during the Games. "Investors had set high expectations on the Olympic Games, hoping they would lift market sentiment and lead to a significant rebound," Qiu Yanying, an analyst at TX Investment Consulting, told AFP. "This anticipation supported the market so that we didn't see any big falls last month, but faith collapsed a couple of hours ahead of the Games," he said. Of the more than 860 companies on the Shanghai stock exchange only about 30 gained on Friday, showing how difficult a challenge it is to stabilise the market, Shanghai-based SYWG's analyst Wei Daoke wrote in a research note. "Confidence in building positions became very shaky, especially for those short-term buyers who are very sensitive to government support," Wei wrote. China Quanjude (Group), which operates a chain of Peking duck restaurants, tumbled by the 10 percent daily limit to 48.18 yuan. Beijing Yanjing Brewery was also limit down to 14.36. Beijing Jingxi Tourism Development lost 6.8 percent at 25.70. All three stocks are considered Olympics-related, because major parts of their operations are in Beijing and are directly or indirectly dependent on tourism. Air China, China Eastern Airlines and China Southern Airlines all shed the maximum 10 percent daily limit, falling to 8.69, 6.86, and 6.76 respectively. "There are investors who bought these stocks on the hope that Beijing would rescue the markets before the Olympics, and that these stocks would rise more sharply," Everbright Securities analyst Shi Honglin told Dow Jones Newswires. The Shanghai A-share index lost 127.33 points, or 4.45 percent, to 2,734.36 on turnover of 46.0 billion yuan, while the Shenzhen A-share index was down 46.77 points or 5.63 percent to 784.01 on turnover of 23.3 billion yuan. The yuan closed the day at 6.8588 against the US dollar, up from Thursday's finish of 6.8614. The Shanghai B-share Index lost 16.59 points, or 8.36 percent, at 181.86. The Shenzhen B-share Index shed 23.87 points, or 5.58 percent, to 404.08.
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