China's shares closed lower again yesterday on the lack of follow-through buying after staging a brief and mild technical rebound in the morning, brokers said.
The benchmark Shanghai composite index, grouping hard currency B shares open to foreign investors and yuan-denominated A shares, fell 0.09 percent lower to 1,484.704 points, a three-month low.
Early strength in auto counters was not enough to pull the entire market up, analysts said.
Index heavyweight Shanghai Automotive's A shares were one of the biggest gainers and rose 2.86 percent to 12.23 yuan (US$1.48), off its midday high of 12.41 yuan (US$1.5).
But its shares have still doubled since the start of this year because of booming domestic demand for cars.
"The market is already below the psychologically important 1,500-point level," said Xiangcai Securities analyst He Bing. "There's no telling how much lower it will go, especially with worries about how SARS will effect mid-term results."
Analysts also said an expected A-share offering by China Southern Airlines Co Ltd, the country's largest carrier, could put further pressure on the markets.
China Southern hopes to raise 3 billion yuan (US$362 million) from an issue of 1 billion A shares in early July to buy new aircraft, market sources said.
Analysts said the offering may draw interest away from other shares.
"Market players are scared of the size of the IPO," said analyst Zhang Jun at Guotai Jun'an Securities. "It could divert investors' money away from other counters."
Analysts also said the offering may strain liquidity, already tight after fall in share indices in the last two weeks on earnings worries ahead of the interim results seasons and fears of a crackdown on the use of bank loans to buy stocks.
"Auto stocks helped the broad market stage a rebound this morning, but it is far from clear whether such shares can lead the market further up because of already heavy gains this year," said MF Securities analyst Chen Dong.
Market indices have already suffered a 5.24-per-cent fall in the past two weeks on earnings worries ahead of the interim results season and fears of a crackdown on the illegal use of bank loans to buy stocks.
Shenzhen's B share index slipped 0.02 percent to 215.70 points, with Shanghai's falling the same margin to close at 112.284.
Earlier gains in two other auto makers were also pared back.
Jiangling Motor closed up 0.6 percent at HK$4.99 (63.97 US cents), while Chang'an Auto rose a scant 0.3 percent to HK$6.35 (81.4 US cents).
Shanghai's A-share index inched down 0.09 percent to 1,554.506 points while its Shenzhen counterpart dropped 0.45 percent to 426.38.
In currency market, China's yuan ended a notch firmer at 8.2774 against the US dollar on Tuesday, moving at a high level within a government-set trading range due to an ample dollar supply on the market, dealers said.
The yuan moved narrowly between 8.2773 and 8.2775 throughout the session.
Turnover was thin at US$470 million, compared with US$450 million on Monday.
Over the past two years, the yuan has hovered near the firm end of the wafer-thin trading range of 8.2760 to 8.2800 the People's Bank of China usually enforces, buoyed by China's healthy trade surplus and strong foreign investment.
Dealers said the trend would continue in the near term as the yuan is not fully convertible on the capital account and its movements are driven mainly by trade flows.
(China Daily July 2, 2003)
