Chinese stocks fall 2.4% on IPO, growth fears

China’s main stock index fell 2.4 per cent on Monday amid concerns over slowing growth and speculation that the Government could soon approve major IPOs that would rain liquidity.

The key Shanghai Composite Index, which tracks the shares traded in foreign and domestic currencies, closed at 1,958.27 points, down 48.93 points, or 2.4 per cent. The smaller Shenzhen Component Index also plunged 2.8 per cent on Monday.

The official

Xinhua news agency said the slump was linked to fears that “liquidity will be drained if the securities regulator resumes the approval of massive initial public offerings later this month.” Other reports said concerns over China’s slowing growth also affected the two stock markets.

The Government is scheduled to publish the half-yearly trade and inflation figures this week, followed by economic growth data next week.

China recorded weaker-than-expected economic growth of 7.7 per cent in the first quarter of this year, and many analysts expect the second-quarter growth to slow further. China’s annual economic growth fell to 7.8 per cent last year, the slowest since 1999.