Shanghai index drops nearly 5 percent

| July 13, 2006 | 0 Comments

Most Asian equities markets saw substantial losses on Thursday. The exception was Manila’s composite index, which added 1.3 percent to 2,261.57.

The Shanghai composite index in China, by contrast, dropped 4.8 percent to 1,655.8 on the news that China’s largest bank, Industrial & Commercial Bank of China, and Daqin Railways both plan to float initial public offerings later in the year. The ICBC IPO will take place on the same day it lists in Hong Kong. Investors worried that the market will be inundated with new paper from the IPOs. Also helping Shanghai lower was a report that the Chinese central bank will raise interest rates once again. Despite today’s losses, however, Shanghai is still 43 percent higher than it was when the year began.

Elsewhere, the Hang Seng index in Hong Kong dropped 1.3 percent to 16,305.48 on the rumors of an interest rate hike in China. The weighted index in Taipei was down 1 percent to 6,567.60 on worries about earnings in the technology sector there.

In Tokyo, the Nikkei 225 dropped 1 percent to 15,097.95 and the Topix index was down 0.8 percent to 1,551.03 as the semiconductors and consumer electronics sectors saw declines.

Advantest declined by 2.9 percent to ¥11,420, while NEC Electronics was down 3.4 percent to ¥3,450 on a downgrade from Credit Suisse. Tokyo Electron dropped 4.5 percent to ¥7,470.

Among consumer electronics companies, Sony fell 1.2 percent to ¥4,930, Canon dropped 1.9 percent to ¥5,620, and Matsushita Electric Industrial, maker of the Panasonic brand, declined by 3.1 percent to ¥2,225.

The consumer finance sector in Tokyo saw gains after recent losses. Takefuji added 4.8 percent to ¥6,120 when a Canadian investment group added to its holdings in the Japanese lender.

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