China's Stocks Drop to Five-week Low; Tsingtao Beer Tumbles By...

China's Stocks Drop to Five-week Low; Tsingtao Beer Tumbles

By Zhang Shidong

June 4 (Bloomberg) -- China's stocks fell to a five-week low low after official media said the slide in shares since stamp duty was tripled last week is a normal adjustment, suggesting the government won't act to stem the decline.

Tsingtao Brewery Co. is among about 100 companies in the index that fell by the 10 percent daily limit.

The benchmark CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, declined 213.03, or 5.6 percent, to 3590.92 as of 10:14 a.m. local time, set for its lowest close since April 30.

The speed that stock prices have soared by is ``extremely unusual,'' which underscores the ``structural bubbles'' in the stock market, state-owned China Securities Journal wrote in an editorial.

The huge price fluctuations within each trading day reflected the ``weak sentiment'' among investors and the fact that the trading is ``unsustainable,'' the Xinhua News Agency- affiliated newspaper said.

China's increase in stamp duty is a ``proper forward-looking adjustment'' to avoid greater ``systemic risks'' in the market and to ensure its healthy development, the paper said.

Tsingtao Brewery, China's biggest brewery by output, plunged 2.53 yuan to 22.83. Huadian Power International Corp., the country's third-largest publicly traded power producer, tumbled 1 yuan to 8.98.

To contact the reporter on this story: Zhang Shidong in Shanghai at [email protected]