Shanghai trade zone sees frenetic sell-off

Large shareholders of the Shanghai Free Trade Zone stocks are cashing out amid a passionate buying frenzy from investors.

By Monday, large shareholders in four companies, including CTS International Logistics, Yangtze River Investment Industry, Lujiazui and Shanghai Shenda, have been selling their stocks in large numbers, according to announcements by the companies. Shares worth a market value of more than 300 million yuan ($49 million) have been sold as of Monday, Securities Daily said on Tuesday.

Prices for shares offered in the Shanghai Free Trade Zone have been soaring since State media reported that the zone will be launched in Shanghai and that the nation may allow unfettered exchanges of yuan in the area, a bold reform aimed at turning the city into an international trade and financial center.

Average price-earnings ratio of 18 free trade zone stocks surged to 123 by Monday, according to Securities Daily. Analysts warned some stocks are being oversold. Jinshan Development and Construction, which have had share prices surge by over 30 percent since September, reported a loss of 4.58 million yuan in the first six months of this year in its mid-term report.