AFTER SEVEN consecutive trading days of advances, China’s A shares finally saw a correction today, with the benchmark Shanghai Composite Index closing down 0.54% pct at 2,955.23.
Profit taking ended the longest rally for the market in 11 months, which has been propelled of late by invigorated fund inflows and a lack of major new restrictions on the runaway property sector.
The index briefly breached the key psychologically significant 3,000 mark in early trade with volume hitting a multi-year daily high of 301.2 bln yuan.
Last week alone, the Shanghai Composite added 8.4%, the index’s biggest weekly gain since February 2009.
However, the sustained bull run unseen in nearly a year was too much of a temptation, and sellers pushed buyers aside in afternoon trading.
A Chinese language piece in SinaFinance said the sustained increases up until the midday break today were primarily driven by expectations of more global liquidity on the prospect of rate action, as well as expectations of more funds entering domestic capital markets.
Real estate counters and steel stocks were the major gainers today.
Market watchers expect the index to trade rangebound around the 3,000 point level in the near term, and play down any possibility of a significant correction – despite ever-present profit taking pressures – due to the likelihood of sound liquidity supporting valuations.
They also added that investors will be closely watching third quarter GDP and CPI figures due out Thursday.
Last week’s bull ride gave a significant boost to brokerages, as they are normally the most direct beneficiaries of the trading volume spikes that normally accompany such a market.
Despite the profit taking sentiment taking center stage today, at least one major stock was sold off on market moving news rather than as a reaction to a perceived overvaluation.
Zijin Mining Group Company’s Shanghai-listed shares (SHA: 601899; HK: 2899) closed down 7.8% today at 9.47 yuan after China’s top gold miner was ordered by a local government to pay nearly 20 mln yuan in fines related to a structural collapse last month that left some 28 people dead or missing.
The Xinyi city government will take additional action if the total amount of losses from the disaster, which is still under investigation, surpasses 19.5 mln yuan, the mining firm said in a statement issued to the Shanghai bourse.
Zijin, which also mines copper and other metals, began a downward valuation spiral earlier this year following news that a toxic spill at a Chinese copper mine it runs contaminated a major river, killing nearly 2,000 tons of fish.
Authorities have since arrested three company executives.
Peer miner Inner Mongolia Baotou Steel Rare-Earth (SHA: 600111) was also down, losing 5.3% to finish the day at 81.54 yuan on profit taking as well as lingering worries over rumors that China might restrict sales of rare earth minerals to major client Japan after the two countries faced off recently over a disputed island group in the South China Sea.
Coal firm Shanxi Guoyang New Energy Co Ltd (SHA: 600348) continued to make headlines, losing 3.4% to close Monday at 25.60 yuan.
See also:
BULL RUN In China Has Analysts Abuzz As 3,000 Nears
Index Breaks 2,800 Mark With 2.5% Surge On Record Turnover
Weeklong Break Over, Whereto Now?
