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China Stocks Plunge 8% in Panic Selling

04.06.07 12:40 Age: 14 yrs
China Stocks Plunge 8% in Panic Selling

Shanghai, China - June 4, 2007

Chinese stocks plunged more than 8% on Monday as jittery investors dumped shares in worries about further potential governmental moves to dampen the market following a stamp tax hike.

The benchmark Shanghai Composite Index lost 8.26% to close at 3,670.41 points, adding to sharp falls last week. That marked the biggest drop since February 27 when the index plummeted 8.84 percent, triggering a global sell-off.

Only 25 out of more than 1,400 stocks in the Shanghai and Shenzhen stock exchanges rose, while about 800 stocks fell to their daily limit of 10 percent.

Blue chip stocks failed to stay firm and joined the small-capital shares in the plunge, which analysts said further affected investors' confidence.

Sinopec dropped its 10% limit to 13.65 yuan, reversing three days of straight rises.

Some analysts believed the government would not permit the slide to extend and the market is about to rebound.

On Monday, three major securities newspapers carried editorials saying the tax rise was merely aimed at speculators and the market's outlook was still positive, a move widely seen as regulators' attempt to restore confidence into investors.

Investors seemed to have slowed down the pace of opening new share trading accounts. On Friday, about 227,000 A-share accounts were opened after 270,000 ones were added Thursday, down from an average of more than 310,000 in the previous week albeit still at a high level.

However, Thursday saw the number of newly added fund accounts ballooned to 449,000 from about 50,000 on average in the previous week.

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Source: By Dong Zhixin (chinadaily.com.cn)

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