Shanghai's B share index fell 0.24 percent to end at 121.605 points, as the approach of a new corporate reporting season in January spurred some investors to dump stocks from companies with poor earnings records, they said.

Chicken breeder Dajiang Group Co, which was in the red in 2000 and 2001, was the volume leader and biggest decliner.

The stock lost 1.51 percent to $0.457 on volume of 5.97 million shares.

Shenzhen's B share index slipped 0.28 percent to 197.36. B shares are open to foreign and Chinese investors.

But the benchmark Shanghai composite index, which also covers yuan-denominated A shares, ended slightly higher as brokerages and other institutional investors tried to dress up books before the end of the year, analysts said.

"Selling in loss makers made B shares end down, but institutional buying kept the overall market on a slight upward trend," said a floor trader at Shenyin & Wanguo Securities.

"Institutions bought shares because they need to dress up their books as the year-end nears," said Zhan Yibing, an analyst at Merchants Securities.

"But the lack of follow-through buying amid weak market sentiment capped gains."

Brokers said institutional investors favored large capitalized stocks, such as oil giant Sinopec Corp's A shares which closed up 0.63 percent at 3.20 yuan (38.7 US cents).

A shares are open to Chinese and select foreign investors.

The A shares in another market heavyweight, China Merchants Bank, rose 0.46 percent to 8.79 yuan (US$1.06).

China's shares staged a brief technical rebound last week, but are still down 36 percent since their peak in June 2001 due to a slew of factors including poor earnings and a crackdown on irregularities which revealed many corporate scandals.

The markets had also been pressured earlier this month by a liquidity squeeze as some investors cashed in stock positions for year-end settlement.

Analysts said they expected the mild rebound to continue for the rest of this month.

"We expect market liquidity conditions to improve in the final few trading days ahead of the New Year as brokerages have already finished preparations for year-end settlement," said Dai Yizhong, a Guotai Jun'an analyst.

"The Shanghai composite index is likely to rise to breach the 1,450 point level before the end of the year," he said.

The index ended yesterday up 0.16 percent at 1,430.199 points.

The Shenzhen sub-index closed up 0.08 percent to 2907.33 points yesterday.

Analyst Shen Yufei of CITIC Securities said still-thin volumes would prevent more significant gains.

"Market volume was picking up this morning, but it showed signs of a reduction in the afternoon, indicating sentiment was still cautious after the prolonged market slump," Shen said.

Shanghai's A index added 0.17 percent to 1,494.495 points and Shenzhen's inched up 0.07 percent to 432.89.

(China Daily December 24, 2002)