Shares extend fall despite government sell-off denial
Chinese stock indices resumed their slide yesterday despite official statements denying plans to dump state-owned shares in listed companies on to the stock market.
The benchmark Shanghai Composite Index grouping the yuan A shares and foreign-currency B shares slipped 0.58 per cent to finish at 1,493.45 points - its lowest close in three weeks.
Mainland share indices had a brief rebound on Wednesday after officials denied a Chinese press report suggesting that the central government would next month allow the resumption of the stock market sale of listed companies' state-owned shares.
On Wednesday, a spokesman of the state-owned Assets Supervision and Administration Commission said the new rule on the transfer of state shares in listed companies did not involve stock market sale of those shares. 'The disposal and free float of state shares in listed companies is the future direction,' he said.
'However, the issue's gravity and sensitivity and the many existing irregularities require us to take both a prudent and a proactive approach and to try to find a scheme acceptable to everybody.'
A scheme to sell state shares on the stock market in 2001 helped trigger a more than 30 per cent fall in mainland share prices over two years. Investor anticipation of a resumption of the sale has hung heavily over the market.
Xiangcai Securities analyst Tang Yong said the press report had set a negative tone for the market.
Guotai Junan Securities analyst Xu Lingfeng said: 'What investors didn't believe was that state shares would be sold down the way the article suggested.' However, investors believed that a resumption of sales was inevitable, he said.
