| Stocks tumble after Zhou warns of possible bubble |
SHANGHAI, June 25 -- CHINESE mainland's stocks plunged by the most in three weeks to a two-week low in volatile trade after central bank Governor Zhou Xiaochuan said shares may be overvalued and he can't rule out raising interest rates.
The Shanghai Composite Index, which tracks the bigger of mainland's stock exchanges, lost 3.7 percent to 3,941.08. The Shenzhen Composite Index, which covers the smaller one, fell 5.1 percent to 1,127.37, Bloomberg said.
Panzhihua New Steel & Vanadium Co and Bright Diary & Food Co were among about 60 stocks that plunged by the daily cap of 10 percent.
``We're not sure whether there's a clear bubble but we worry'' that shares are priced too high compared with earnings, Zhou told reporters in Basel, Switzerland, where he attended a meeting of central bankers over the weekend.
``We don't rule out further rate increases if necessary,'' and inflation remains a concern, Zhou said.
Panzhihua New Steel, the world's third-biggest maker of railroad track steel, plunged 1.12 yuan (15 US cents) to 9.32 yuan. Bright Diary, a Chinese partner of Groupe Danone SA, fell 1.13 yuan or 10.18 yuan.
Citic Securities, China's biggest publicly traded brokerage, lost 2.96 yuan, or 3 percent, to 55.29 yuan. Shanghai International Airport Co, operator of China's second-busiest airfield, fell 2.57 yuan, or 6.5 percent, to 37.22 yuan.
China Life Insurance Co, the nation's biggest insurer, gained 1.09 yuan, or 2.5 percent, to 44.53 yuan. Higher interest rates will boost returns for insurers, which invest in fixed-income assets such as banking deposits.
Local investors set up 295,229 accounts for investing in equities and mutual funds on June 21, bringing the total to 106 million, according to the latest figures from the China Securities Depository & Clearing Corp.
Some 27 million brokerage accounts have been opened this year, more than five times that of 2006, diverting money from banking deposits.
Elsewhere, China Petroleum & Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, dropped 0.82 yuan, or 5.7 percent, to 13.47 yuan.
The company said Chairman Chen Tonghai resigned today for ``personal reasons.'' Sinopec also said it will hold an extraordinary general meeting on August 10 to elect Su Shulin as director.
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