Chinese shares drop at week's end after overnight loss on Wall Street

Fri, Jul 25 03:17 PM

SHANGHAI, China (AP) _ Chinese stocks fell Friday after a larger-than-expected decline in existing U.S. home sales and worries about the financial sector triggered a sell-off on Wall Street. The benchmark Shanghai Composite Index fell 1.55 percent to close at 2865.10.

The Shenzhen Composite Index dropped 0.69 percent to close at 860.689. Some market heavyweights were down, including China Life Insurance, the country's biggest life insurer, which fell 3.87 percent.

Baosteel Group Co., which until late last month was China's biggest steel company, fell 2.82 percent.

Analysts noted caution among institutional investors. "We can see more individual investors trading shares now than a few days ago, while institutional investors are standing still.

So it's hard to say where the trend is going so far," said Xu Zhiyuan, a strategist at Capital Edge Investment and Management in Shanghai. China's individual investors in particular have watched in despair as the Shanghai index has lost around half its value this year.

But analysts looked for bright spots Friday. "In my opinion, there's a big chance in energy shares in the next half-year with the drop of crude oil's price on the New York Mercantile Exchange," said Zhang Xiuqi, an analyst at Guotai Jun'an Securities in Shanghai.

"And as we heard, the government might take moves to raise the price of domestic gasoline." Zhang didn't give details.

Light, sweet crude for September delivery rose 67 cents to US$126.16 a barrel in electronic trading on the New York Mercantile Exchange by early Friday afternoon in Singapore. Crude, which topped US$147 a barrel earlier this month, now sits nearly 15 percent below its peak.

Any rise in oil prices pressures Chinese refiners, which are losing money under government price controls that limit their ability to pass on high crude costs to consumers. China Petroleum & Chemical Corp.

, also known as Sinopec, Asia's biggest refiner, lost 0.44 percent Friday. PetroChina Ltd.

, China's biggest oil producer, closed down 2.14 percent.

RECOMMEND THIS STORY