Source: CCTV.com

04-02-2008 11:22

Chinese shares plunged over 4 percent on Tuesday, taking the main index close to a one-year low. Over 600 shares fell by their daily limit of 10 percent.

Chinese shares plunged over 4 percent on Tuesday, taking the main index close to a one-year low. Over 600 shares fell by their daily limit of 10 percent.

The benchmark Shanghai Composite Index closed at 3,329. Over 95 percent of shares across the board fell over 2 percent.

The top 20 heavyweights in the Shanghai market fell over 3 percent on average. PetroChina, the major index component, lost nearly 2.3 percent to near its initial public offering price.

The Shenzhen Component Index also tumbled as much as 6 percent. Analysts say the continuous plunges in the market are mainly due to the imbalance between the supply and demand of liquidity.

Shi Lei, Chief Analyst of TX Investment Consulting said "From the last quarter of 2007 to the first quarter this year, a large number of IPOs, plus the expiration of stock lock-up periods, both rocked the market by affecting market liquidity. Meanwhile, cautious sentiment has taken a grip on the market, which has also lead to a shortage of cash."

China's major stock index rebounded by 4.9 percent last Friday on market talk that the securities regulators might cut the stamp duty or unveil the timetable for the launch of stock index futures, perhaps over the weekend. But these expectations failed to materialize and that further hurt sentiment.

Analysts say confidence wouldn't return unless the government announced support measures. Market forces alone won't be enough.

Editor:Xiong Qu