Shanghai's key stock index fell again in the morning session today after a rally yesterday.
The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, was down 0.98 percent, or 42.55 points, to 4,291.49.
Losers in the Shanghai market outnumbered gainers 471 to 352 while 29 were unchanged.
The Shenzhen Composite Index, which covers the mainland's smaller stock market, lost 0.23 percent, or 3.15 points, to close at 1,352.16.
GD Midea Electric Appliances Co, China's largest publicly traded maker of household goods, fell the most in more than a decade after Goldman Sachs Group Inc cut its stock rating to "sell."
Midea declined as much as 10 percent to 42.02 yuan (US$5.88) this morning, the biggest drop since February 1997. It slumped 6.83 percent, or 3.19 yuan, to finish the session at 43.50 yuan.
The stock resumed trading today after an almost two-week suspension because of an acquisition. Goldman cut the rating to sell from "neutral."
"We view earnings risk from business integration execution and likely export weakness as the key medium-term negative catalyst" for the shares, Goldman analysts Tommy Wong and Reggie Fang said in a report today.
Foshan, Guangdong-based Midea said yesterday it agreed to pay 1.68 billion yuan for a 24 percent stake in washing-machine maker Wuxi Little Swan Co.
Ping An Insurance (Group) Co, China's second-largest insurer, decreased 2.33 percent, or 1.67 yuan, to 70.15 yuan.
It said 3.1 billion yuan-denominated shares will become tradable next week as their one-year lockup period expires.
Some so-called "strategic investors" will be allowed to sell their holdings, representing 42 percent of total outstanding shares, on March 3, the Shenzhen-based company said in a statement to the Shanghai stock exchange today.
The company still has 859.8 million non-tradable shares subject to two more years of lockup.
Ping An raised 38.9 billion yuan in a Shanghai share sale almost a year ago. The insurer announced on January 18 a plan to offer 1.2 billion additional shares and convertible bonds worth about a combined 160 billion yuan.
The Shanghai-traded stock has plunged 28 percent since the announcement.
On the positive side, Shanghai Pudong Development Bank Co, partly owned by Citigroup Inc, gained 1.55 percent, or 1.63 yuan, to close the session at 41.25 yuan.
Pudong Bank may sell as many as 800 million shares within a year upon shareholder approval, it said in a statement today, less than the one billion shares that some analysts expected, after the stock fell and China's securities watchdog clamped down on secondary offerings.
News of the sale triggered a 24 percent drop in Pudong Bank's market value in the past few trading days on concern it would dilute per-share earnings.
Pudong Bank, which today forecast 2008 profit growth of more than 50 percent, said it would use the money to bolster capital eroded by lending growth.
The bank said today that its 2007 profit rose 64 percent to 5.5 billion yuan, or 1.26 yuan a share, confirming a preliminary earnings statement last month.
(Shanghai Daily, February 28, 2008)
