Agbank Shares Fall Below IPO Prices, Market Downward Pressure Increases

SHANGHAI, Sep. 16 (SMM) – Shanghai Stock Exchange and Shenzhen Stock Exchange Component Index both slipped after a low open on Thursday, extending yesterday’s declines, an indication of a weak trend for both markets. The most worrying thing finally happened. China's Agricultural Bank (ABC) shares fell below its IPO price of RMB 2.68 per share after its debut two months ago. The ABC equity prices have fluctuated around its IPO price for nearly a month, and its failure to keep above its IPO price has greatly dampened market confidence, resulting in wide-spreading pessimistic market sentiment. SMM believes that plunging price in China’s domestic stock markets has a very close link to the market talk that China’s central bank is considering raising the subsidy rate for value-preserved savings, and may set an asymmetric interest rate hike after the National Day holiday. The rumor has greatly exerted negative impact on China’s domestic stock market.

With falling prices in domestic stock markets, the entire financial market will be prevailed by panic sentiment, and this will negatively affect domestic base metal markets. SMM believes that metal prices will decline in the short term. Market participants are suggested to keep alert and be wary of their positions, and any bottom fishing behavior is not appropriate at present. Market players shouldn’t enter the market until a clear market trend is available.

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