SHANGHAI: Chinese shares closed slightly lower on Wednesday to end the year down 65.5 per cent- the steepest annual loss in the market's 18-year
history, dealers said.
The massive plunge has made China one of the worst performing major stock markets this year as the global financial crisis continues to wreak havoc, traders said.
On Wednesday, the benchmark Shanghai Composite Index, which covers A and B shares, closed down 12.11 points, or 0.66 per cent, at 1,820.81 on turnover of 33.5 billion yuan (4.9 billion dollars).
The key index hit the year's intraday low of 1,664 points on October 28, down more than 70 per cent from its record high of 6,124 points the previous year.
Beijing has announced a series of supportive measures to boost the economy and prop up equity markets, including cutting transaction taxes and letting its investment arm increase its stakes in three major banks.
"These measures prevented the market from sinking further, but investors remained sceptical about whether government spending can be successfully translated into consumer spending," said Wu Youhui, an analyst with GF Securities.
Throughout the year the market was caught in a cycle where investors were betting on what Beijing's next announcement might be, above companies' fundamentals, a situation that seems unlikely to change anytime soon.
Analysts believe the market will probably not see a significant rebound until the second half of next year, when the economy starts to recover.
The Shanghai A-share index on Wednesday shed 12.76 points, or 0.66 per cent, to 1,911.79 on turnover of 33.4 billion yuan, while the Shenzhen A-share index was down 7.70 points, or 1.31 per cent, at 581.51 on turnover of 20.5 billion yuan.
The yuan closed at 6.8230 against the US dollar on Wednesday, the last trading day of the year, strengthening from Tuesday's finish of 6.8353.
Airline shares extended their losses from the previous session after China Eastern reported a fuel hedging loss of about 420,000 dollars in November due to the continued fall of the price of oil.
China Eastern, the country's third-largest carrier, closed the day down 8.0 per cent to 4.13 yuan.
Other carriers with significant fuel hedging positions also fell. Air China ended down 1.4 per cent at 4.10 yuan and China Southern Airlines dropped 3.6 per cent to 3.19 yuan.
Steel makers also tumbled amid continued worries over profitability after Tangshan Iron and Steel said it would merge with Handan Iron and Steel and Chengde Xinxin Vanadium and Titanium through share swaps.
Tangshan Iron Steel fell by the 10 per cent daily limit to 3.69 yuan, Chengde Xinxin lost 7.7 per cent to 4.57 yuan, and Handan Iron Steel slid 5.3 per cent to 3.25 yuan.
The Shanghai B-share Index was down 0.05 points, or 0.05 per cent, at 110.92, while the Shenzhen B-share Index added 2.04 points, or 0.76 per cent, to 271.28.
