Stocks fall to their lowest for 3 months

A stock investor at a brokerage in Fuyang, Anhui province, on Monday. [Photo/China Daily]

A-share market haunted by fears over eurozone and policies

China's stock market fell to a three-month low on Monday due to a mixed bag of factors ranging from new worries about the eurozone and the changing of the guard at the China Securities Regulatory Commission.

There was also the government's call for thrift and a recall by an automaker, along with nagging fears over the economic slowdown, which continue to haunt the market.

The Shanghai Composite Index fell 1.68 percent to 2,240.02 points at the close, the lowest since Dec 28. Trade volume was 81.5 billion yuan ($12.97 billion), down 19.8 percent from Friday.

Analysts said Asian stocks were affected by a radical bailout plan for Cyprus, which cast further uncertainty on the euro. Hong Kong's Hang Seng Index fell 2 percent.

The market on the Chinese mainland was trying to digest the implications of the appointment of Xiao Gang, former chairman of Bank of China Ltd, to succeed Guo Shuqing as chairman of the CSRC.

Zhang Cheng, an analyst with Datong Securities Co Ltd, said: "The market is quite divided about the future development. Some are optimistic, while some are concerned over whether the policies introduced by Guo will continue, and what the new chairman will bring to the market."

The market appeared relatively cautious on Monday, as investors are uncertain about these policies, and have not reached consensus on reading the signals sent from the annual sessions of the country's top legislature and political advisory body.

Guo was the sixth chairman of the commission, and also the one with the shortest tenure.

The commission has expanded foreign institutional investor quotas to buy stocks, cut trading fees, urged companies to increase dividends, and made efforts to expand the bond markets since Guo became chairman in 2011.

He also led the most stringent screening of IPO applications since late 2012, causing 42 companies to abandon their IPO attempts.

The commission has released seven documents since Thursday, including a draft proposal to scrap a minimum net assets requirement that applies to domestic investors seeking outbound investment under the qualified domestic institutional investors program.

Ye Tan, an economics commentator, said in her blog: "I am paying my respects to Guo. He was trying to safeguard a fair market, to lay a foundation for market-set prices, and push forward full and accurate information disclosure."

The reform should go on, and will go on, she added.

Guosen Securities Co Ltd released a report on Monday, saying Premier Li Keqiang's news conference on Sunday had sent out a "neutral" signal.

"Li is optimistic about long-term economic development, but his tone also indicates an unwillingness to pursue over-fast growth, as China's fast growth has exposed too many problems, including inflation risks and an overheated property market," the report said.

Housing prices rose in February in 62 cities out of the 70 tracked, compared with a year earlier, the National Bureau of Statistics said on Monday. And on a month-on-month basis, 66 cities registered a rise in housing prices.

Nomura warned in a report on Friday that there are rising risks of a financial crisis in China, due to elevated property prices and a decline in potential growth.

Chinese distiller Wuliangye saw its share price drop by 4.54 percent to 22.91 yuan, the lowest in 30 months, after Premier Li urged government departments to cut spending on official travel, hospitality and vehicles in his press conference.

SAIC Motor Corp, China's largest carmaker, declined 2.59 percent after the quality watchdog ordered its partner Volkswagen AG to recall some vehicles. They are suspected of having substandard direct-shift gearbox systems.

xieyu@chinadaily.com.cn