Little confidence in Chinese stock market despite new gov't measures

Investor confidence in the Chinese stock market remains weak despite a government measure to boost the economy.

Share prices only went up 0.56 percent in Thursday morning session after the central bank announced both interest rate and reserve-requirement ratio cuts Wednesday night.

The benchmark Shanghai Composite Index opened 1.59 percent higher at 2,125.57 points, but dipped to 2,063.83 at 10 a.m. before closing in the morning at 2,104.01 points. The Shenzhen Component Index declined 0.39 percent to 6,897.53 points.

The early drop was largely due to PetroChina shares, which dipped to 11.9 yuan before closing up 0.25 percent to 12.16 yuan.

Other heavyweights also had poor performances. China Shenhua Energy Company fell 1.7 percent to 22 yuan and the Industrial and Commercial Bank of China declined 0.25 percent to 4.06 yuan.

Irico Display Devices was the only stock that rose to the daily limit of ten percent. It gained 0.28 yuan to close at 3.08 yuan as it announced a net profit estimate of 40 million yuan in the first three quarters.

Securities shares made gains after heavy loss in the previous two days. For instance, Pacific Securities was up 7.83 percent to 19.27 yuan and Citic Securities rose 5.1 percent to 21.86 yuan.

Though the interest rate cuts should have benefited the real estate industry, property shares only increase 0.33 percent in overall growth, said analysts. Beijing Urban Construction Investment & Development Co. rose 5.44 percent to 7.36 yuan, but China Vanke Co. dropped 2.15 percent to 6.36 yuan. Poly Real Estate Group Co. was down 3.65 percent to 14.53 yuan.

Despite gains in the Shanghai benchmark index, total sells still outnumber buys, which shows strong investor prudence, analysts said.

Wednesday evening, the People's Bank of China announced deposit and lending rates would be lowered by 0.27percentage points on Thursday and the reserve-requirement ratio would be down by 0.5 percentage points starting Oct. 15.

The cuts, the second such move in less than a month, highlighted the government's rising concern over the slowing economy and slumping capital market, analysts said.

Source:Xinhua