Shanghai shares suffer further losses

By Jamil Anderlini in Hong Kong (www.ft.com)
Published: June 5 2007 06:03 Last updated: June 5 2007 06:03

Chinese shares closed down 5.7 per cent Tuesday morning as investors continued to dump stocks on fears the market correction will go on.
By the close of morning trade, the Shanghai Composite Index had fallen to 3,462.52 points, roughly the same level it was at two weeks ago.
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Some 100 companies, including Air China and Shanghai International Port, fell the daily limit of 10 per cent. Just 57 of the 1,400-odd companies listed in Shanghai and Shenzhen ended the morning up.
The Shenzhen Composite Index fell 6.5 per cent to end the morning at 976.38.
The falls in Shenzhen and Shanghai were exacerbated by fund managers liquidating holdings in response to massive redemptions by retail investors, who tend to trade mutual funds in the same speculative way as individual stocks.
The government sought to reassure investors again Tuesday with another round of soothing front-page articles in the main financial papers saying the current correction is a temporary phenomenon that will not effect the wider bull market.
The fall on Tuesday morning extends a slide that began last Wednesday after the government tripled the stamp duty on stock transactions to 0.3 per cent.
The Shanghai market has dropped 20 per cent in a week from the record high of 4,334.92 points it reached last Tuesday.