Chinese stocks fall again

December 26 -- The Shanghai Composite Index lost 14.67 points, or 0.67 percent, to close at 2,190.11 points today on transaction value of 36.40 billion yuan.

The Shenzhen Component Index was down 100.33 points, or 1.12 percent, to close at 8,876.19 points on transaction value of 35.81 billion yuan.

Both indices opened lower. There was a rebound during the morning session before the gains were eroded in afternoon trading.

Zhou Xiaochuan, governor of The Peoples’ Bank of China, said in an economic forum that financial institutions should reduce their reliance on ratings agencies.

The China Securities Regulatory Commission said it will soon review IPO applications submitted by nine companies this week.

Gong Fangxiong, President of Morgan Chase Asia, said the weak market reflected the risks of an economic slowdown and a hard landing. Gong said the financial and pharmaceutical sectors were his favored sectors.

CITIC Heavy Industries, one of China’s seven largest heavy machinery makers and a producer of large equipment for construction materials, minerals, metallurgical and power, was reported to be applying for an initial public offering.

It was reported by Reuters that Xinhuanet.com plans to raise one billion yuan through a listing on the Shanghai Stock Exchange which will be underwritten by CICC.

China’s investment in railway infrastructure construction in 2012 is forecast to hit 400 billion yuan, compared to an investment of 700 billion yuan in 2011.

The news drove related companies down. CSR Corporation (601766, 4.42, -7.34%), China CNR Corporation (601299, 4.28, -4.25%) and Jinxi Axle (600495, 11.46,-4.98%) fell.

Almost all the financials fell, with Southwest Securities (600369, 8.19, +1.11%) and Huatai Securities (601688, 7.81, +0.386%) being the only two gainers from the sector.

China Construction Bank (601939, 4.54, -0.439%), Bank of Communications (601939, 4.54, -0.439%) and Bank of China (601988, 2.88, -0.690%) traded lower.

Real estate developers mainly fell except for a rally in the morning session. Gemdale Corporation (600383, 4.86, -2.410%), China Vanke (000002, 7.53, -0.397%) and Poly Real Estate (600048, 10.08, -1.079%) edged down.

Sinopec (600028, 7.14, +0.563%) rose, while PetroChina (601808, 9.71. 1.221%) was bearish.

Companies from the cultural and media sector retreated. Tangel Culture (300148, 25.95, -5.50%), Jiangsu Phoenix Publishing and Media Corporation (601928, 8.68, -4.82%) and Guangdong Alpha Animation and Culture (002292, 25.71, -4.78%) were down by more than 4.5 percent.

A government department found that products of Mengniu Group contained excessive levels of aflatoxin M1, a carcinogen. Inner Mongolia Yili Industrial Group (600887, 19.79, -5.36%) and Bright Dairy and Food (600597, 9.00, -0.33%) fell.

Spirits makers led by Jiugui Liquor (000799, 22.83, -5.86%), Yantai Chang Yu Pioneer Wine (000869, 22.83, -5.86%) and Kweichow Moutai (600519, 193.12, -3.81%), decreased.