China shares fell to their lowest level in more than six months yesterday as investors fled the market, disappointed that a key industry meeting failed to yield market-boosting steps as expected, brokers said.

The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, finished down 0.68 percent at 1,455.899 points, the lowest close since January 23 when it closed at 1,450.616.

Analysts said buyers and sellers were likely to wage a seesaw battle around the psychologically important 1,450-point level, the outcome of which could offer hints for near-term market direction.

Yesterday investors cashed in shares that have surged this year, including index heavyweight Shanghai Automotive Co, which closed down 4.35 percent at 12.08 yuan (US$1.46) - one of the day's worst performers.

Brokers said market sentiment was bearish after China's top regulator told a seminar of brokerage executives in Beijing that the government would tighten supervision over stock markets, dashing widespread hopes he would announce policies to prop up the market.

"Regulators must enhance supervision to promote the development of brokerages and markets," China Securities Regulatory Commission chairman Shang Fulin said in a keynote policy at the seminar.

Analysts said investors had anticipated much stronger support for the long-depressed market, which has fallen 35 percent since mid-2001 due to a crackdown on financial corruption and too many stock offers, which thinned liquidity.

"Shang's speech was not regarded as the positive factor that many investors had hoped it would be," said analyst Chen Zhijian at Kunlun Securities.

Traders said they were not optimistic over the near-term market trend, but at the same time prolonged market weakness had eased selling pressure.

"The market is still under pressure from a slew of negative factors," said securities trader Lu Wei at East Asia Securities. "But the Shanghai composite index is now just ahead of the key 1,450-point resistance, which may deter further selling."

Zhongjin Gold Co yesterday became China's first gold firm to list shares as part of precious metal industry reforms.

Its A shares surged 118 percent to 8.82 yuan (US$1.07), buoyed by strong interest due to the company's sole presence in the stock market and a low IPO price of just 4.05 yuan (US$0.49), brokers said.

On the foreign exchange market, China's yuan ended flat at 8.2770 to the dollar yesterday, close to the firmer end of its tightly managed range.

The yuan kept within a wafer-thin range of between 8.2769 and 8.2771 throughout the session. The central People's Bank of China enforces a trading range of 8.2760 to 8.2800. Turnover rose to a moderate US$540 million from US$530 million on Wednesday.

The yuan firmed yesterday to 6.9352 against 100 yen from 6.9480, and eased versus the euro to 9.3641 from 9.3150. It slipped a notch versus the Hong Kong dollar to 1.0610.

Shanghai copper futures tracked a rebound on the London Metal Exchange to close a touch higher yesterday, though sentiment remained wary, traders said.

The most active December 2003 contract climbed 30 yuan (US$3.6) to 17,690 yuan (US$2,137) a ton, while other contracts ended 30 yuan (US$3.6) to 100 yuan (US$12) higher.

Combined volume fell to a moderate 62,750 lots from Wednesday's 73,346 lots.

(China Daily August 15, 2003)