Shares of the Shanghai stock market fell Thursday for the second straight day, pulled down by companies such as Wuhan Steel Processing Co, as big investors sold existing shares to reserve cash for today's debut on Shenzhen's board for small and medium-sized companies.

The Shanghai Composite Index, which tracks both yuan-denominated A shares and hard-currency B shares, eased 0.90 percent to 1,427.75.

The A-share Index dropped 0.93 percent to 1,498.98 while the B-share Index added 1.82 percent to 88.01.

"The selling primarily came from companies which mutual funds are overweight upon," said Wu Kan, head of the investment consulting department with Shanghai Securities Consulting Co. "It was no coincidence that they trimmed stock positions on the main board amid the start of trading of the new board in Shenzhen."

Wuhan Steel Processing, the listed unit of the country's fourth largest steelmaker, lost 5.70 percent to 6.45 yuan (77.71 US cents). Tianhua Securities Investment Fund, which is under management of Shenzhen-based Yinhua Fund Management Co, held 0.7 percent of the company as the No. 2 shareholder, according to the Wuhan Steel Processing earnings report for last year.

Eight companies, including drugmaker Zhejiang NHU Co and Elec-Tech International Co, a manufacturer of kitchen electric appliances, will start today to trade on Shenzhen's board for small and medium-sized firms.

"Undoubtedly, shares will surge on the first trading day as investors speculate to buy," said Wu. "But I don't think these companies hold too much investment valuations."

(Shanghai Daily June 25, 2004)