Second warning from regulator sees investors taking profit

Second warning from regulator sees investors taking profit


SHANGHAI shares dipped from a record high yesterday as investors took profit after China mainland's stock regulator issued a second warning in a month against market risks.
The Shanghai Composite Index, which covers yuan-denominated A shares and hard-currency B chips, slipped 0.54 percent to close at 4,151.13, snapping a three-day 3.56 percent rise.
The benchmark barometer climbed as high as 4,208.39 in early intraday trading yesterday before profit taking set in. Turnover hit 257.5 billion yuan (US$33.7 billion), a wee bit lower than the record 257.6 billion yuan set on May 9.
"Investors took the regulatory warning as an excuse to sell part of their holdings to realize profit," said Sun Wenli, a China Galaxy Securities Co dealer. "But the overall upside won't change although the index may fluctuate with heavy trade in several days."
The China Securities Regulatory Commission late on Wednesday told brokers to educate investors so that they know what they are doing when they play the market.
Former US Federal Reserve Chairman Alan Greenspan also warned on Wednesday that the Chinese mainland stock market was heading for a "dramatic contraction."
Market observers noted the correction would likely be short-lived as there is still ample liquidity but advised investors to focus on quality chips rather than smaller firms which are involved in asset-restructuring rumors.
"We believe the index has the room to increase further and will likely go above the 4,200 level," said analysts at Huatai Securities Co in a note. "We advise investors to keep their blue-chip holdings for now."
Among losers, Baoshan Iron & Steel Co, China's biggest steel maker, lost 1.81 percent to 12.50 yuan on worries over its profit margins due to a proposed tax on steel-product exports.
Shanghai Automotive Co, the country's largest auto maker, tumbled 4.43 percent to 15.74 yuan. China Petroleum & Chemical Corp, Asia's biggest refiner, shed 1.35 percent to 12.45 yuan.
Bucking the downward trend, shares of financial counters rose yesterday after the China pledged to open its mainland banking and securities industries wider to overseas investors during the Sino-US economic talks in Washington.
Citic Securities Co, the nation's top listed brokerage, added 2.26 percent to 60.29 yuan. Shanghai Pudong Development Bank Co soared 5.09 percent to 29.11 yuan.