Chi stocks extend decline

Beijing, July 31: Chinese shares continued to drop on Friday as investors showed caution in the shadow of the earlier market stampede. The benchmark Shanghai Composite Index (SCI) shrank 1.13 percent to close at 3,663.73 points. The smaller Shenzhen Component Index fell 0.18 percent to close at 12,374.25 points. The ChiNext Index, tracking Chi’s sdaq-style board of growth enterprises, lost 0.83 percent to end at 2,539.84 points. The turnover of the two bourses came in at 878.08 billion yuan down from 1.1 trillion yuan the previous trading day. Chi’s stock market went through a roller-coaster ride this week, with the worst plunge in eight years on Monday but then rallied on Wednesday. The SCI shed 14.3 percent in July, its biggest single-month decline since 2009.

Sun Xiwei, a senior alyst with CITIC Securities said the dramatic fluctuations reflected unstable market sentiment and that stock prices will remain volatile until confidence is restored.

In a bid to end the market rout that wiped off one-third of its value since mid-June, the government has reduced the number of IPOs, banned short-selling and introduced a six-month ban on big shareholders selling stocks. The Chi Securities Regulatory Commission (CSRC), the top stock watchdog, said on Friday that it will increase checks on programme trading blamed for some of the volatility. CSRC spokesperson Zhang Xiaojun said the agency is examining some cases and the Shanghai and Shenzhen exchanges have restricted trading of 24 accounts until October 30 as they were suspected of misleading other investors by frequent orders and cancellations. Programme trading usually focuses on a basket of stocks with buy and sell orders executed by a computer programme based on predetermined conditions. It can amplify gains and losses and increase fluctuations. (IANS)