China's shares ended lower yesterday, retreating from a robust bounce yesterday as a giant IPO by the firm spearheading the Three Gorges Dam project drew in funds, brokers said.

The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, edged down 0.32 percent to 1,385.110 points. The Shenzhen index slid 8.93 points, or 0.27 percent, to end at 3287.60 yesterday.

Despite rallies in other Asian markets, the index has shed 15.1 percent since mid-April, hit by factors including an overloaded IPO pipeline and a tightening of bank loans.

Yangtze Electric Power Co Ltd plans to issue 2.326 billion A shares to raise a net 9.83 billion yuan (US$1.19 billion) to become the fourth largest initial public offering ever on the mainland bourses. It started secondary market subscription yesterday.

Analysts said a shortfall of funds has prevented the market from sustaining a wider rebound and would keep trading in a limited range in the near term.

"Some investors fear the liquidity crunch should worsen as institutions ready cash before end-of-year book settlements," said analyst Mao Sheng at Huaxi Securities.

A shares of Xinjiang Hops Co Ltd <600090.SS> fell their 10 percent limit for the third straight session to 12.14 yuan (US$1.47) after the company said on Tuesday its chairman had gone missing, leaving behind a trail of debt.

Investors also continued dumping poor earners as they are paying more attention to company fundamentals, brokers said.

Dalian Changxing Industry Co Ltd <000827.SZ> dropped its 10 percent daily limit to 8.72 yuan (US$1.05) after reporting a heavy third-quarter loss.

But Shanggong Co <900924.SS> bucked the broad market downtrend after saying yesterday it would issue US$50 million in hard-currency shares to Germany's FAG Kugelfischer AG and others. Its B shares surged 8.99 percent to close at 58 US cents.

The planned offering is a rare event for China's tiny US$11 billion B share markets, which have not seen a single initial public offering since October 2000.

The Shanghai B-share index rose 1.4 percent to 113.233 points, while its Shenzhen counterpart gained 2.07 percent to 277.16.

On the metal market, copper and aluminium consumers in China are hesitating to buy spot cargoes after sharp rises in the price of both metals this week, traders said.

Traders in Shanghai said some copper end-users had stopped production due to the latest price surge. Copper product prices had not kept pace with rising metal costs, they said.

"Demand has slowed over the past couple of days. Customers are sharing a wait-and-see attitude on prices," a manager at one large Chinese copper producer said.

Traders said most aluminium fabricators have also failed to raise prices for their products, cutting their profit margins.

"Aluminium sales in Nanhai have been slower. Prices rose too fast," said a trader in Nanhai, home for many aluminium fabricators, in the southern province of Guangdong.

In the spot market, copper traded on Wednesday at 21,500-21,650 yuan (US$2,600-US$2,618) a ton, up from 21,100-21,150 yuan (US$2,551-2,557) a week ago.

Spot aluminium was traded at 16,150-16,400 yuan (US$1,950-US$1,980) a ton, up from about 15,360-15,700 yuan (US$1,855-US$1,896) a week ago.

The latest rise in physical copper and aluminium was triggered by futures prices that set a new benchmark for spot metals.

Copper and aluminium futures on the Shanghai Futures Exchange have jumped in the past week following rises in benchmark London Metal Exchange contracts. Increased longs by speculators also supported the futures, dealers said.

China's yuan ended unchanged versus the US dollar at 8.2767 yesterday, near the stronger end of its managed trading range.

(China Daily November 6, 2003)