Shanghai stocks dropped this morning led by blue chips among airlines, banks and heavy industry.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, was down 0.86 percent, or 42.55 points, to 4,915.49 at 11:30am today.

 

Losers in the Shanghai market outnumbered gainers 473 to 288 while 84 were unchanged.

 

But the Shenzhen Composite Index, which covers the smaller mainland stock market, was virtually flat and inched up to 1,302.27 from yesterday's 1,302.25.

 

Airlines suffered a broad sell-off and led losses this morning in the market, erasing gains yesterday due to a stronger yuan.

 

Air China, the world's biggest airline by market value, lost 5.17 percent, or 1.33 yuan (18 US cents), to 24.42 yuan while China Eastern, the nation's third-largest carrier, shed 5.53 percent, or 1.06 yuan, to 18.11 yuan.

 

Heavyweights in the industrial sector also contributed to the market's loss this morning.

 

Sinopec, the country's biggest refiner, slid 2.36 percent, or 0.52 yuan, to finish the early session at 21.55 yuan while PetroChina buckled 1.24 percent, or 0.38 yuan, to 30.15 yuan.

 

China may not subsidize oil refiners this year to compensate them for state-controlled fuel prices, National Development and Reform Commission Vice-Chairman Zhang Xiaoqiang said in Beijing. Zhang said it was his personal opinion.

 

Meanwhile, lenders and developers were mixed this morning. The government may introduce more tightening measures after home prices rose last month at the fastest pace since August 2005.

 

Industrial and Commercial Bank of China, the biggest lender in China by market value, lost 2.22 percent, or 0.18 yuan, to 7.92 yuan.

 

But China Merchants Bank rose 1.34 percent, or 0.50 yuan, to 37.91 yuan.

 

China Vanke, the nation's largest publicly traded property developer, edged up 0.24 prcent, or 0.07 yuan, to 29.47. Financial Street, a Beijng developer, slipped 0.86 percent, or 0.22 yuan, to 25.39 yuan.

 

Home prices in 70 major cities in China rose 10.5 percent in November from a year earlier, after gaining 9.5 percent in October, according to a transcript of remarks by Cao Changqing, director of pricing at the National Development and Reform Commission posted on the government's Website. That was the biggest increase since records began in August 2005.

 

The government has raised interest rates five times this year and ordered banks to set aside 14.5 percent of deposits as reserves from December 25, the highest proportion in a decade, to prevent the economy from overheating.

 

China may impose a property tax as early as next year, the Shanghai Securities News reported Wednesday.

 

(Shanghai Daily December 14, 2007)