BEIJING, April 25 China shares dropped 1 percent
on Friday and suffered their worst week since early January, as
concerns about market liquidity hurt investor sentiment after
Guanghui Energy became the first mainland firm to announce plans
to issue preferred shares.
The Shanghai Composite Index ended down 1 percent at
2,036.52 points. The CSI300 index of the leading
Shanghai and Shenzhen A-share listings also dropped 1 percent.
On the week, the SSEC shed 2.9 percent, its biggest weekly
fall since the week ended Jan. 10. It is down 8.2 percent so far
Shares in Guanghui Energy Co Ltd rose 4.6
percent on Friday after the company announced its preferred
share issuance plan.
Regulators have given companies the green light to issue
preferred shares as part of the reforms planned for China's
capital markets, but investor reaction to the scheme has been
Some welcome the scheme because preferred share issues would
minimise the dilution of existing shareholders compared with
common equity issuance.
But others worry that a flood of new preferred share issues
could siphon demand from existing shares and pressure stock
Worries are already running high that a upcoming rush of
initial public offerings may lead to funds being diverted from
existing shares into new stocks.
(Reporting By Natalie Thomas; Editing by Chris Gallagher)