Domestic stocks fell this morning amid a wide spread sell off among blue chips in the banking and property sectors as unsettled investors are concerned that more tightening measures may be implemented to cool the economy.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, was down 1.79 percent, or 89.41 points, to 4,918.50 at 11:30am today. The index opened at 5,007.29 at 9:30am.

 

But gainers in the Shanghai market outnumbered losers 456 to 304 while 86 were unchanged.

 

The Shenzhen Composite Index, which covers the smaller mainland stock market, lost 0.44 percent, or 5.86 points, to 1,325.88. The Shenzhen index opened at 1,334.34 at 9:30am today.

 

Vanke, the nation's biggest listed property developer, slid 7.68 percent, or 2.30 yuan (31 US cents), to 27.65 yuan.

 

Shanghai Pudong Development Bank Co, the Chinese partner of Citigroup Inc, dropped 3.80 percent, or 1.88 yuan, to 47.59 yuan. China Merchants Bank Co, the nation's biggest dual-currency credit-card issuer, lost 4.38 percent, or 1.69 yuan, to 36.90 yuan.

 

China has raised the key one-year lending rate to a nine-year high of 7.29 percent, clamped down on bank lending and tightened project approvals.

 

The central bank last week told commercial banks to tighten rules for mortgage loans to help curb rising home prices that rose 10.5 percent in November, the fastest pace since 2005.

 

Sagging investment confidence also bruised industrial shares in the early session today.

 

China Petroleum & Chemical Corp, or known as Sinopec, the nation's largest oil refiner, slid 1.59 percent, or 0.35 yuan, to 21.69 yuan while PetroChina, the nation's biggest oil company, also buckled 1.67 percent, or 0.51 yuan, to finish the session at 30.04 yuan.

 

China may not subsidize oil refiners this year to compensate them for selling fuel at state-controlled prices, National Development and Reform Commission Vice-Chairman Zhang Xiaoqiang said in Beijing last week. He was expressing his personal view, Zhang said.

 

Sinopec Shanghai Petrochemical Co, a unit of Sinopec, plans to offer 3.2 state-owned A shares for every 10 held by shareholders in the country.

 

The company's shareholders in China will meet on January 15 to approve a proposal to convert state-owned stock to "circulating'' shares, the refiner said in a statement to the Shanghai stock exchange today.

 

The company was suspended from trading today.

 

China Shenhua Energy Co, the nation's largest coal producer, slipped 2.54 percent, or 1.63 yuan, to yuan 62.49 this morning.

 

The company said its output of the fuel rose 15.8 percent to 13.2 metric tons last month as it expanded capacity to meet demand in the world's fastest-growing major economy.

 

On the positive side, airlines notched up among the gloomy performance in the market this morning

 

China Eastern, a Shanghai carrier, added 1.75 percent, or 0.33 yuan, to 19.15 yuan while Shanghai Airline gained 3.40 percent, or 0.55 yuan, to close the session at 16.72 yuan.

 

The price of crude oil fell to US$91.27 on Friday in New York after a report showed United States consumer prices gained the most in more than two years in November, threatening domestic spending and pushing the US dollar to a one-month high.

 

(Shanghai Daily December 17, 2007)