Shanghai shares/close -- 2 (foreign stake sales hurt sentiment)
Shenzhen-listed Guangdong Expressway today announced that Yi Bao Construction Overseas Investment sold 46.9 mln B-shares in the company, equivalent to a 5.6 pct stake, by March 23. At the same time, China International Marine Containers announced that Long Honour Investments sold 17 mln B-shares in the company, equivalent to a 5 pct stake, between March 7 and 27. Qunyi Securities analyst Wu Jian said the announcements indicate that foreign strategic investors have been using the B-shares' strong performance over recent weeks as an opportunity to withdraw from the B share market. While there has still been foreign B-share buying, particularly from Hong Kong and Taiwan, over recent weeks, the market has become increasingly dominated by investors seeking short-term gains, he said, adding that B-share selling could strengthen markedly once these investors feel there is little scope for further B-share gains. "The B-shares have come to a very risky stage. At current price levels, B-shares only hold value for short-term speculation, not long-term investment. This is why the market has become so volatile," he said, adding that he believes B-shares could undergo a sharp correction in the near future. Concerns about the outlook for the B-share market have also hurt A-share investor confidence, he said, noting that a B-share correction would be likely to pull A-shares lower in the near term. Nonetheless, the environment for the A-share market remains strong, he said, adding that he expects A-shares to recover quickly from a B-share correction. Strong A-share liquidity should drive the composite index over its record high closing level of 2,125.61 points before too long, he added. Great Eagle Securities analyst Ma Jian said the B-shares were ripe for a technical correction, but the news that foreign strategic investors had reduced their stakes in CIMC and Guangdong Expressway added to the downward pressure on B-share prices. "Although the B-shares have sustained rapid gains, foreign investors are not increasing their positions. Instead they are selling," he said, adding that the market is becoming increasingly dominated by domestic investors. Anhui International Trust & Investment analyst Zhang Huo said A-share prices continued to consolidate near the psychologically-important level of 2,100 points on the composite index. Nonetheless, he said he expects A-shares to break above their record high shortly, adding that confidence should strengthen as prices go above that level. The fact that companies' earnings generally improved last year should support further A-share gains, he said. On its first day of trading, Jiangxi Lianchuang Photoelectron closed at 24.0 yuan, up 17.34 from its issue price of 6.66 on 40.9 mln shares. China Minsheng Banking rose 0.34 yuan to 18.06 on 12.6 mln shares. Heilogjiang Electric Power rose 0.06 yuan to 10.84 on 5.3 mln shares. Dongfeng Automobile gained 0.06 yuan to 9.19 on 8.4 mln shares. Sichuan Changhong gained 0.07 yuan to 12.38 on 5.9 mln shares. Shenergy shed 0.2 yuan to 18.8 on 5.5 mln shares, while Shanghai Automotive dropped 0.1 yuan to 12.99 on 4.7 mln shares. Among B-shares, Zhejiang Southeast Electric Power dropped 0.017 usd to 0.759 on 21.2 mln shares, while Heilongjiang Electric Power rose 0.032 usd to 0.874 on 27.9 mln shares. Tianjin Marine closed up 0.035 usd at 0.783 on 21.1 mln shares. Shanghai Lujiazui Finance dropped 0.021 usd to 0.75 on 12.2 mln shares.
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