Index suffers from slipping Rubber Belt

SHANGHAI B shares yesterday lost ground for only the second time in 11 days, led by Rubber Belt which slumped after reporting poor interim earnings amid rising rubber prices.

Sentiment also was hit by the nearly 13 per cent slump in the Shanghai A index.

''There's nothing strange about this after such a huge rise in the past week,'' said Joyce Leung, a trader with Sun Hung Kai Securities.

The Credit Lyonnais Shanghai B-share Index fell 18.51 points, or 2.11 per cent, to 858.43 on turnover worth US$9.97 million, up from $8.98 million on Monday.

Bloomberg reported that 15 stocks fell, six rose and seven were unchanged.

Rubber Belt, one of China's biggest rubber belt makers, slipped to 16.6 cents - a drop of 15.8 per cent, a day after soaring 18.8 per cent per cent.

Yesterday, the company said its net profit for the first half was just 2.81 million yuan (about HK$2.5 million).

''This doesn't take into account income from co-operative companies so it is hard to make comparisons with last year,'' said Quinny Cheung, an analyst with Standard Chartered Securities.

High rubber prices in China have hurt company earnings and most analysts expect little respite in the second half of this year.

''Rubber Belt has had to rely on local suppliers whose prices are higher, even after paying a 30 per cent import tariff, than those of the overseas suppliers,'' Nomura International said in a report.

The day's most active stock was Industrial Sewing Machine which gained 0.4 per cent to 51.8 cents with 2.44 million shares traded.

''The company's interims are due out soon which has sparked interest,'' Ms Leung said.

Air-conditioner and refrigerator manufacturer Shangling rose 0.5 per cent to 80.4 cents with 959,100 shares traded. Shangling is expected to release its interim results later this week.