Leo Zhang/Shanghai Daily news

Shanghai stocks fell yesterday after a nine-day holiday break as a report on moderate earnings growth at state-owned enterprises crippled sentiment.
Local hard-currency shares paced the decline after Shanghai Forever Co said owners of its B stock won't be entitled to compensation in China's share-structure overhaul, fueling concerns more companies may copy its move.
The Shanghai Composite Index, which tracks yuan-denominated A shares and foreign-currency B shares, lost 1.44 percent to 1,138.95. The A-share Index shed 1.40 percent to 1,196.95. The B-share Index slumped 4.80 percent to 64.40.
"The government's austerity policies and overcapacity at key industrial companies prompted investors to be jittery about profit prospects," said Liu Yu, an Orient Securities Co analyst.
"Holders of B shares were disappointed at being excluded from Forever's compensation and many investors expect the action would be adopted by most of the firms with foreign-currency equities," he added.
China's major state companies posted a collective profit of 489 billion yuan (US$60.3 billion) in the eight months through August 31, up 18.4 percent from a year earlier, the State-owned Assets Supervision and Administration Commission said on September 30, after the stock bourses closed for the National Day holiday.
The earnings growth dropped from a 20.6 percent increase in the January-July period, according to the commission.
China Petroleum & Chemical Corp, Asia's biggest oil refiner, retreated 2.66 percent to 4.02 yuan. Baoshan Iron & Steel Co, China's biggest steelmaker, lost 1.40 percent to end at 4.22 yuan.
Shanghai Forever and Shenzhen-listed China Vanke Co yesterday became the first batch of firms with B shares involved in the government's program to convert US$270 billion of mostly state held shares into tradable equities. The two firms declined to compensate holders of foreign-currency stocks, which are already fully tradable.
Financial regulators earlier said holders of B shares and Hong Kong-listed H shares won't automatically get compensation. The decision on whether to include them for compensation rests with A share owners.
"It's more complex to work out plans for those with Hong Kong-listed shares due to different listing rules and valuations," Liu said.
So far, no firm with H shares has yet to convert their state shareholdings into free-floating entities.
But investors of such companies will probably be compensated as the watchdog "may be getting concerned about the negative implications of not giving" compensation, Deutsche Bank strategists Nam Nguyen and Jun Ma said in a report last month.
In Hong Kong, Hang Seng Index rose, led by companies with US earnings such as Yue Yuen Industrial (Holdings) Ltd.
Resources companies such as Cnooc Ltd advanced after prices of raw materials including crude oil gained. Retailers such as Esprit Holdings Ltd fell after a government report showed that sales growth was slower than expected in August.
The Hang Seng Index added 0.34 percent, to 14,898.77 in Hong Kong.