Investors were worried about global political instability and economic weakness as US warplanes pounded Afghanistan repeatedly in retaliation for the September 11 hijacker attacks on New York and Washington.

The Shanghai B-share index inched down 0.11 percent to close at 151.403 points on thin turnover of US$26.48 million, although that was up from US$22.72 million on Wednesday.

Brokers said the index rebounded in the morning but soon resumed a downward trend due to weak market sentiment after consecutive falls.

But they expect limited falls or a small technical rebound in the next few days after the falls.

Shenzhen's B-share index edged up 0.50 percent to 243.22, helped by a rise on the neighboring Hong Kong stock market, brokers said. Turnover was slim at HK$140.88 million (US$18.1 million), up from HK$118.12 million (US$15.1 million).

China's B shares, available to foreign investors, have generally fallen over the past month as a result of the September 11 attacks, with Shenzhen's B-share index down 15 percent and Shanghai's down 10 percent.

Brokers said in addition to worries about the state of global politics and the world economy, Chinese markets were also depressed by an official crackdown on market corruption.

"Looking at the price movements over the past few weeks, China shares have actively responded to falls on global markets, but lagged behind their rises," said a senior analyst at Shanghai Securities.

"Sentiment is weak as the crackdown continues even as the market is falling. That's different from the soothing policies we've seen from the government in similar situations in the past few years," he added.

The Shenzhen exchange criticized home appliance maker Guangdong Marco Co <0533.SZ> on Wednesday for failing to disclose the guarantees it gave for loans taken by major shareholders.

On Tuesday, Shanghai-listed fish breeder Hubei Lantian Co <600709.SS> said it had been put under regulatory investigation.

Domestic A shares, reserved for Chinese investors, were more affected by the crackdown than B shares and continued falling yesterday amid poor sentiment, brokers said.

The Shanghai composite index lost 48.286 points to 1,638.326 on thin trading of 5.38 billion yuan (US$649.7 million), although that was up from 5.00 billion yuan (US$604.9 million).

The Shenzhen composite sub-index dropped a further 73.77 points to 3,274.33 as turnover ticked up to 3.68 billion yuan (US$445.0 million) from 3.19 billion yuan (US$385.3 million).

Meanwhile, B-share markets lack a focus for trade, brokers said.

Shenzhen-listed refrigerator maker Anhui Meiling Co <2521.SZ> was the top performer yesterday, ending up 2.63 percent at HK$3.90 (50 US cents) on a thin volume of 885,940 shares.

Brokers said Meiling was supported by technical buying after it had fallen since announcing disappointing interim results in mid-August.

In Shanghai, loss-maker Jinan Qingqi Motorcycle <900946.SS> was the biggest decliner on worries over corporate prospects. It fell 1.25 percent to 55 US cents on volume of 1.03 million shares.

(China Daily 10/12/2001)