Virus-induced panic selling filters through to wider mainland market
Friday, April 25, 2003
markets.scmp.com
BEI HU
Sars-induced panic selling of mainland stocks spread to the wider market yesterday as the growth in atypical pneumonia cases shook investor confidence and deflated hopes for a quick rebound.
The Shanghai A-Share Index declined 40.272 points or 2.49 per cent to 1,573.058. The Shenzhen A-Share Index dropped 12.6 points or 2.76 per cent to 442.81.
"[Sars] has dealt a heavy blow to investor confidence," said Guotai Junan Securities analyst Xu Lingfeng. "The market fluctuations may represent an over-reaction to it."
Shares on the mainland have tumbled this week after the government sacked its health minister and the mayor of Beijing and admitted that the number of Sars cases in the capital city was 10 times higher than previously reported.
As the number of cases continues to grow, the fallout in the stock market has rippled through sectors previously untouched by China's decision to shorten the week-long May Day holiday and discourage long-distance travel.
"At the beginning, [the share-price falls] were limited to a few, directly affected sectors," Mr Xu said.
"Now, if the virus spreads farther and lasts longer, the entire gross domestic product may slow, and the effect will no longer be limited to aviation, transportation, retail and catering."
The Shanghai-listed A shares of China United Telecommunications, parent of the country's No 2 cellular carrier, fell 1.94 per cent. China Petroleum & Chemical, China's second-largest crude-oil producer, ended down 2.61 per cent.
The A shares of Shanghai Automotive, a minority shareholder in a car plant controlled by General Motors, tumbled 7.91 per cent. The stock had gained 52.9 per cent this year. |
