Friday, December 25, 2009

China’s Stocks Drop for First Time in Three Days; Zijin Falls

China’s stocks dropped for the first time in three days, paring a weekly gain, on concern new share sales will divert money from existing equities.

Zijin Mining Group Co. and China Shenhua Energy Co., the nation’s largest producers of gold and coal, lost at least 1.3 percent as eight companies debuted in Shenzhen’s ChiNext market for start-up companies today. Pharmaceutical companies Joincare Pharmaceutical Group Industry Co. advanced as investors sought so-called safe havens that aren’t easily affected by the economic swings.

The Shanghai Composite Index fell 12.06, or 0.4 percent, to 3,141.35 at the close. It added 0.9 percent in the past five days, its first weekly gain in three weeks. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, declined 0.4 percent to 3,424.78.

“The market will be in a fluctuating pattern until the end of the year,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which manages about $285 million. “The market won’t have a strong performance, unless the government slows down new share sales.”

The Shanghai gauge has rallied 73 percent this year as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade. The index has dropped 1.7 percent this month as a flood of share sales diverted funds from existing equities and the government raised down payments on land purchases.

Zijin, Jiangxi Copper

Zijin Mining lost 1.9 percent to 9.47 yuan after rising 4.7 percent yesterday. Shenhua fell 1.3 percent to 32.79 yuan. The stock gained 4.8 percent yesterday.

Jiangxi Copper Co., China’s biggest producer of the metal, lost 1.7 percent to 37.93 yuan. Zhongjin Gold Corp., the country’s second-largest bullion producer by market value, slid 2.6 percent to 56.21 yuan.

Eight companies including Jiangsu Huasheng Tianlong Photoelectric Co. and Guangzhou Improve Medical Instrument Co. jumped on the first day of trading in the ChiNext market for technology-heavy start-ups.

They are the second batch of companies that have been listed on the market, adding to the first 28 companies that went public at the end of October. ChiNext has less stringent rules for listing compared with the nation’s two main exchanges.

Mainland companies have raised 194 billion yuan ($28 billion) from initial public offerings this year, 87 percent more than the whole of 2008, according to data compiled by Bloomberg, as an improving economy lures investors.

New Listings

Anhui Xinhua Media Co., the biggest publishing house in the province, said it plans to raise 712 million yuan in an initial public offering in Shanghai to fund its expansion.

Joincare Pharmaceutical advanced 6.3 percent to 12.17 yuan, rising for a fifth day. Zhangzhou Pientzehuang Pharmaceutical Co., a manufacturer of Chinese traditional medicine, gained 3.1 percent to 39.08 yuan. A measure tracking health-care stocks gained 1.5 percent today, the second biggest among the CSI 300’s 10 industry groups.

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

China CAMC Engineering Co. (002051 CH) rose 3.4 percent to 25.70 yuan after the company said 2009 net income may rise 30 percent to 50 percent.

Guangdong Mingzhu Group Co. (600382 CH) rose by the 10 percent daily limit to 8.55 yuan after saying it received a 78.8 million yuan dividend payment from Guangdong Dading Mining Co.

Shenzhen Gas Corp. (601139 CH), a supplier of bottled gas, more than doubled to 15.17 yuan in its Shanghai trading debut after raising 903.5 million yuan in its initial public offering.

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