| Stocks slide from record on rate concerns |
SHANGHAI, June 20 -- MAINLAND'S stock index fell from a record on concern new shares sales will draw funds from existing equities and the central bank will raise interest rates. China Merchants Bank Co declined.
"Rumors of interest rate increases prompted a sell-off in the afternoon,'' said Wei Wei, an analyst at West China Securities Co in Shanghai, according to Bloomberg. "And the fast pace of new share sales has dampened sentiment.''
The Shanghai Composite Index, which tracks the bigger of domestic stock exchanges, dropped 2.07 percent to 4,181.32. The Shenzhen Component Index slid 1.60 percent to 14,107.23.
PetroChina Co, the country's biggest oil company, said it plans to sell as many as 4 billion shares in a domestic share sale. Based on its last closing price in Hong Kong, the sale would raise up to US$5.6 billion.
China Cosco Holdings Co, operator of Asia's largest container line, raised 15 billion yuan (US$1.97 billion) selling 1.78 billion domestic shares, it said in a statement today. The sale was the fourth biggest approved in China this year, according to data compiled by Bloomberg. China Construction Bank Corp, the nation's third-largest lender, said last week it may sell 9 billion shares domestically.
Merchants Bank, which has the biggest weighting in the CSI 300, slid 1.09 yuan, or 4.5 percent, to 23.02 yuan. China Vanke Co, the nation's biggest listed property developer, retreated 0.74 yuan, or 3.6 percent, to 20.06 yuan.
Aluminum Producers
Industrial & Commercial Bank of China Ltd, the nation's biggest listed lender by assets, dropped 0.13 yuan, or 2.5 percent, to 5.11 yuan. Bank of China Ltd, the country's second-biggest, fell 0.13 yuan, or 2.4 percent, to 5.22 yuan.
Expectations of an interest-rate increase have been mounting as inflation accelerated to a two-year high last month and fixed-asset investment surged.
Higher interest rates curb banks' lending business and deter people from purchasing houses. The People's Bank of China has raised interest rates twice this year to rein in industrial expansion and tame inflation.
Aluminum producers fell after the government said it will cut export tax rebates for the metal.
Yunnan Aluminium Co, China's fourth-largest aluminum maker, fell 0.98 yuan, or 5.2 percent, to 17.91 yuan. Shanxi Guanlu Co lost 1.14 yuan, or 6.3 percent, to 17.00 yuan.
China, the world's biggest producer of aluminum used in car and aircraft parts, will remove tax rebates of between 8 percent and 11 percent on rods and bars effective from July 1, the Ministry of Finance said yesterday.
Shenzhen Bank
The benchmark earlier rose to a record after account openings at brokerages reached a two-week high, suggesting the flow of savings in to equities will pick up.
Local investors opened 406,491 new accounts for investing in mainland stocks and mutual funds on June 18, according to the China Depository & Clearing Corp. That's the highest tally since June 1 and takes the total number of accounts to 105.1 million.
Shenzhen Development Bank Co surged as trading resumed for the first time since May 31 after investors approved a revised plan to make all its stock tradable.
Shenzhen Bank, controlled by buyout firm TPG Inc, jumped 2.50 yuan, or 8.7 percent, to 31.19 yuan after surging as much as 16 percent. Holders of tradable shares agreed to receive 1.5 call warrants and one share for every 10 held to compensate for major shareholders being able to trade their holdings publicly.
Companies whose shares resume trading after gaining approval for share reforms are exempt from the normal 10 percent cap on daily price fluctuations for one day.
Elsewhere, Tangshan Iron & Steel Co, the listed unit of China's second-biggest steelmaker by output, gained 0.13 yuan, or 0.9 percent, to 14.37. Net income will probably rise as much as 80 percent in the first half from 702.7 million yuan a year ago, on increased capacity and production of higher-value products, the company said.
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