Shanghai's hard currency B share index fell 1.73 percent to end at 114.535 points, while Shenzhen's shed 1.5 percent to 187.14.

Brokers said investors shrugged off State media reports that Agricultural Bank chief Shang Fulin had been appointed chairman of the China Securities Regulatory Commission (CSRC), replacing Zhou Xiaochuan who was named central bank governor.

"We know little about the CSRC's new chairman Shang because he has mainly worked in the banking sector," said Haitong Securities analyst Zhang Qi.

The newspaper reports gave no reason for the change. A spokeswoman for the CSRC confirmed the appointment but declined further comment.

Analysts said they didn't expect great changes in China's policies on regulating the securities markets.

"I guess there will be no big changes in CSRC's policies in the near term because Shang always paid more attention to stability when he was the general manager of the Agricultural Bank of China," said Chen Huiqing, a Huatai Securities analyst.

Analysts said investors remained depressed in response to a 19-month downturn which has wiped 37 per cent off share indices.

They sold market heavyweights, such as Shanghai Airlines Co, on news that CITIC Securities Co would list on January 6 and Pudong Development Bank planned to sell 300 million additional shares in its issue.

"Punters began to sell heavyweight stocks on concerns that the market will decline further, under the weight of more shares issues," said Shanghai Securities analyst Shao Rui.

Shanghai Airlines slumped 3.4 percent to end at 6.57 yuan (79.4 US cents).

Pudong Bank rose 2.33 percent to 9.67 yuan (US$1.17), rebounding after its 6.2 percent fall over the last four trading sessions.

Analysts said Chinese punters like to speculate on poor earners in the hope that government-sponsored restructures will help them dramatically reverse their fortunes.

Heavyweighted Sichuan Changhong Electric Co, the largest TV producer in China, edged up after it said yesterday its television sales in 2002 had risen 78 percent from a year earlier to 11 million sets.

China's yuan finished two notches lower at 8.2774 against the US dollar yesterday, as overseas banks and foreign-invested companies demanded more dollars for year-end book settlements, dealers said.

They said the tightly controlled foreign exchange market did not react to news that the government had appointed a new central bank chief, former top securities regulator Zhou Xiaochuan.

The yuan moved in a relatively wider range of 8.2770 to 8.2777, after closing at 8.2772 on Friday. Turnover surged to a heavy US$650 million from US$280 million.

Analysts anticipated no major policy changes from Zhou, 54, who steps down as chairman of the China Securities Regulatory Commission and replaces outgoing governor Dai Xianglong.

"The market did not respond to the reshuffling at the central bank as players did not see major changes in China's currency policy," said a dealer at a major domestic bank.

"The yuan edged down today as there was more dollar demand, mainly from foreign companies, for year-end settlement," he said.

China keeps the yuan trapped in a 40-notch range to safeguard economic stability. The currency is not fully convertible on the capital account, so exchange rates are usually driven by foreign trade flows.

(China Daily December 31, 2002)