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1st LD-Writethru: Chinese stocks nosedive on record turnover

Xinhua, May 28, 2015 Adjust font size:

Chinese shares plummeted on Thursday, with the benchmark Shanghai Composite Index diving 6.5 percent to finish at 4,620.27 points, after closing at a fresh seven-year high the previous day.

Shenzhen Component Index plunged by 6.19 percent to close at 15,912.95 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 5.39 percent to end at 3,432.98 points.

Total turnover on the two bourses reached an all-time high of around 2.4 trillion yuan (400 billion U.S. dollars), the fourth consecutive trading day that saw turnover beating 2 trillion yuan.

Losers outnumbered winners by 836 to 80 in Shanghai and by 1,203 to 190 in Shenzhen. About 600 shares dropped by the daily limit of 10 percent.

The major index opened higher on Thursday, and even hit a fresh 7-year high of 4,986.5 in the morning trading. However, the index plummeted in afternoon trading, led by heavyweight shares.

Oil, steel, electricity, coal, aerospace military, ship building, securities, insurance, property, and online education sectors all dived sharply.

Banking sector average fell by 4.92 percent to close at 11.43 yuan per share. The insurance sector average dropped 7.74 percent to close at 49.78 yuan.

China Minsheng Banking Corp. fell by 5.99 percent to 10.05 yuan. China Life Insurance Company Limited plunged 6.61 percent to 35.73 yuan.

Gao Xiang, an analyst with CITIC Securities, described Thursday's dive as "understandable" and partly attributable to concerns about liquidity. IPOs next week include China's first nuclear power stock, China National Nuclear Power. Investors fear that funds will be sucked out of he market.

Reports on Thursday that Central Huijin Investment Ltd., a government investment firm, had sold over 3.5 billion yuan of its A-share holdings in two large state-owned banks, also helped send the market south.

Securities firms have increased deposits for margin trading, making it harder for investors to borrow funds to trade stocks, Gao said.

Gao expects the stock market to continue its rise in the long run, as easing policies defend growth. He advised investors to keep calm and be cautious. Endite