Shanghai shares close morning lower on institutional selling

SHANGHAI (AFX-ASIA) - A-share prices closed the morning lower after a technical correction accentuated by institutional selling, dealers said.

They said some institutions may be trimming positions on concerns that the market will register a negative response to the expected launch of the government's plan for the flotation of state shares in listed firms, but downside risk still seems limited amid hopes of further liquidity-driven gains.

B-share prices closed the morning sharply lower after dropping from flat on a surge in institutional selling in the final minutes of the session, they said.

They said B-shares are approaching a highly risky phase, with prices already far above levels justified by corporate fundamentals, while many investors may be seeking opportunities to take profits amid expectations of a surge in buying from June 1, when domestic individuals gain the right to use foreign currency deposited after February 19 to invest in B-shares.

The A-share index dropped 25.86 points to 2,274.93 on turnover of 6.33 bln yuan after trading between 2,303.17 and 2,274.93.

The B-share index closed 4.40 points lower at 216.50 after trading between 224.85 and 216.41.

The composite A- and B-share index closed 25.35 points lower at 2,184.99 on turnover of 8.94 bln yuan after trading to a high of 2,213.40 and a low of 2,184.98.

The SSE-30 index shed 21.70 points to 3,962.03.

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