Shanghai's key index slid below the support level of 5,000 points today after posting the biggest drop in two weeks after a wide sell off of shares across the board.

 

The Shanghai Composite Index, which tracks both yuan-denominated A shares and hard-currency B shares, slumped 4.41 percent, or 106.11 points, to close at 4,984.16.

 

The Shenzhen Composite Index, which covers the smaller mainland stock market, declined 4.61 percent, or 27.58 points, to 1,253.28.

 

Losing Shanghai stocks outnumbered gainers by 721 to 54 today while 71 were unchanged.

 

A total of 65.7 billion yuan of shares were traded on the Shanghai bourse today, far less than the more than 220 billion yuan of shares exchanged during mid October.

 

Today's slump dragged the Shanghai index to the lowest point since August 22, when the index added 0.50 percent and closed at 4,980.08.

 

A bull run in domestic stocks pushed the index up 129 percent between the start of this year and a record intra-day high of 6,124 points in mid-October.

 

Since then, investors have been discouraged by tightening monetary policy, curbs on fund flows into stocks, a flood of new share offers, high valuations and sagging stock markets overseas.

 

Blue chips sank across sectors today. Banks and real estate developers continued a recent slump over concern that the United States housing loans crisis could slow China's economy.

 

Industrial & Commercial Bank of China, the nation's biggest listed lender, was down 2.39 percent, or 0.19 yuan (2 US cents), to 7.76 yuan. Bank of Communications lost 5.01 percent, or 0.74 yuan, to close at 14.04 yuan today.

 

China's exports growth may slow next year due to declining demand from the US brought about by the subprime crisis, Xinhua news agency reported today, citing central bank Governor Zhou Xiaochuan.

 

Zhou also said on Sunday that the central bank will continue to "withdraw liquidity'' by raising the amount lenders have to set aside in reserves to curb the country's feverish economy.

 

The People's Bank of China this month raised the proportion of deposits that lenders must set aside as reserves to 13.5 percent, the highest since at least 1987.

 

China Vanke, the nation's biggest listed property developer, slid five percent, or 1.64 yuan, to 31.18 yuan while Shimao Property Co, a Shanghai developer, plunged 6.40 percent, or 1.29 yuan, to 18.86 yuan.

 

Industrial stocks also posted steep falls today.

 

Yunnan Tin Co, the world's largest producer of the metal, dropped the daily cap of 10 percent, or 6.47 yuan, to close at 58.23 yuan while Zhongjin Gold, China's largest publicly traded gold miner by market value, gave up 7.34 percent, or 7.09 yuan, to 89.53 yuan.

 

Jiangxi Copper Co, China's second-largest producer of the metal, declined 6.67 percent, or 3.32 yuan, to 46.49 yuan.

 

The company will own at least 20 percent of Afghanistan's largest copper mine should a final development agreement be reached with the Afghan government. At least half of the Aynak mine's output of copper concentrate will be sold to the South China-based company, it said in a filing today to the Shanghai Stock Exchange.

 

Securities stocks sank today on concern lower trading volumes will erode income.

 

Citic Securities Co, the nation's largest brokerage, tumbled 6.39 percent, or 5.96 yuan, to 87.24 yuan while Northern Securities slid 8.30 percent, or 4.34 yuan, to 47.95 yuan.

 

(Shanghai Daily November 22, 2007)