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China's shares fell yesterday as punters continued to unload stocks in firms linked to scandal-tainted tycoon Zhou Zhengyi.
But Sinopec Corp outperformed the market on news that China's welfare fund had entrusted its stake in the oil giant to domestic fund managers, brokers said.
"Investors hunted for bargains in Sinopec as the national social security fund built positions in the company," said analyst Zhou Fengwu at Orient Securities.
Sinopec Corp led the yuan-denominated A-share market in both gains and volume, rising 3.39 percent to 3.96 yuan (US$0.477) with 166 million shares changing hands.
Shanghai's composite index dipped by 8.705 points to 1,530.215 while Shenzhen's sub-index lost 34.33 points to 3,327.97.
Shanghai's B-share index fell 0.53 percent to 114.518 points and Shenzhen's edged down 0.05 percent to 215.37. Hard currency B shares are open to Chinese and foreign investors.
Machinery maker Xugong Science and Technology, which is linked indirectly to tycoon Zhou's flagship Nongkai Development (Group), again fell by its 10 percent limit to 9.88 yuan (US$1.19) after having closed limit-down every day over the past week.
The company has lost nearly half of its value since last Monday because of reports that Zhou was being investigated for suspected improprieties at Nongkai.
Shares in another two firms connected with Zhou also continue to fall. Stationery maker Daying Modern Agricultural Co slipped 1 percent to US$0.456, while developer Albatronics dropped 2 percent to 8.96 yuan (US$1.07).
Both firms have fallen nearly 20 percent over the past week.
Bucking the trend were shares in steel companies which investors have favoured since early this year due to a boom in the domestic auto sector.
Baoshan Iron and Steel Co, China's largest steel maker, rose 0.9 percent to 5.36 yuan (US$0.645) while Ma'anshan Iron and Steel gained 1 percent to 4.21 yuan (US$0.507).
Also outperforming the market were shares in China's largest minivan maker Chongqing Chang'an Automobile after the company repeated yesterday its forecast of a more than 50 percent rise in first-half earnings.
Chang'an was the third best B-share performer in Shenzhen with a rise of 2.31 percent to HK$6.20 (US$0.821).
On the foreign exchange market, China's yuan closed a notch weaker against the US dollar at an intraday low of 8.2772 yesterday, staying firm within a central bank-set trading range due to ample dollar supply, dealers said.
The yuan touched an intraday high of 8.2769, moving near the strong end of a tiny trading range of 8.2760 to 8.2800, which the People's Bank of China enforces. Turnover fell to a tiny US$310 million from US$370 million on Friday.
The yuan had moved around 8.2770 for about two years, helped by healthy trade surpluses which ensured a steady inflow of dollars to the Shanghai-based forex market.
"Ample dollar supply will continue to be the dominant factor on the market, helping keep the yuan at high levels in the near term," a domestic bank dealer said.
Central bank Governor Zhou Xiaochuan said in March the yuan's exchange rate was "largely appropriate" and there was no hurry to tinker with it.
A recent Reuters poll of 10 economists showed most did not expect a change in the yuan's range this year.
While adjustments of its peg to the dollar are possible, they expect the currency to remain pegged at some level for six more years on average.
The yuan rose to 6.9905 per 100 Japanese yen from Friday's 7.0281 and firmed against the euro to 9.6694 from 9.8099.
It closed a notch weaker against the Hong Kong dollar at 1.0613.
(China Daily June 10, 2003)
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