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SCMP Reporter

Strong fixed-asset investment figures keep buyers at bay

Shares slipped in the mainland yesterday as vehicle and steel stocks were hit by quick profit-taking in a familiar pattern as investors waited for the government to produce a lasting lead on the policy front.

Dealers said there seemed to be very little willingness to hold stocks for any length of time and equally little incentive to do so after the latest fixed-asset investment figures suggested growth needed to slow further, opening the way possibly to more interest-rate increases.

Analysts said the benchmark index had found moderate support after testing but failing to breach convincingly the psychologically crucial 1,300-point level in past sessions.

Most blue chips declined as institutional investors cashed out after a hard-won rally on Wednesday.

The Shanghai Composite Index fell 8.03 points or 0.61 per cent at 1,305.02.   The Shenzhen Composite Index was down 3.29 points at 328.71.

'Gains in the morning were erased by profit-taking in vehicle and steel stocks given still cautious market sentiment,' Great Wall Securities analyst Xu Wenfeng said. 'Most investors would rather cash in quick gains, if there are any, than hold stocks for a long time unless [there are] some substantial market-boosting policies.'

Haitong Securities analyst Zhang Qi said: 'Institutional investors sold off their positions in some blue chips as part of portfolio adjustments.

'The overall market is still in consolidation,' he said.

Chongqing Changan Automobile and Jiangling Motors both lost more than 3 per cent.

Maanshan Iron and Steel was down 1.45 per cent while Panzhihua New Steel and Vanadium fell 2.26 per cent.

On the positive side, banks were favoured on the view that higher interest rates would boost their basic income, dealers said.

Institutional investors turned their attention to banks instead, trader said.

Banks had been pummelled by the nearly 30 per cent slump in stock markets between April and September, hit mainly by authorities' economic-cooling steps.

Huaxia Bank rose  2.36 per cent and China Minsheng Banking added 1.39 per cent.

China Merchants Bank, the largest listed bank, climbed 0.92 per cent.

But share prices have begun to stabilise over the past three months, helped by market-friendly policies such as approval for insurers to invest directly in stocks.

Buyers also picked up agricultural stocks on prospects of more favourable government policies for rural areas as well as higher grain prices, dealers said.

Xinjiang GuanNong Fruit and Antler rose its daily limit of 10 per cent.

Bellwether China United Telecommunications Corp, the smaller of the country's two wireless operators, was  the most active stock yesterday, as it lost 0.7 per cent.

Sinopec Corp, Asia's top oil refiner and the most valuable stock on mainland exchanges, also slipped 0.7 per cent.

Agence France-Presse, Reuters



Profit takers sell as players await substantial policy moves