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Yuan's wider trading band puts dent in share prices
By Hu Xiaocen |
April 16, 2012, Monday
|
Online Edition
Online Edition
SHANGHAI stocks closed lower as analysts said the yuan's wider trading band poses short-term risks to exporters although the added flexibility may support economic growth in the long term.
The Shanghai Composite Index dipped 0.09 percent to 2,357.03 points with turnover of 73.8 billion yuan (US$11.7 billion).
The yuan's trading band against the US dollar was doubled from 0.5 percent to 1 percent, effective today, according to a People's Bank of China statement on Saturday.
"The currency's one-way appreciation has come to an end," said Qu Hongbin earlier, a chief economist with HSBC. "With two-way fluctuations, exporters are relieved from the pressure of a stronger yuan."
Some analysts disagree with Qu and said the wider band speeds up the internationalization of yuan, and allows a slow appreciation of the currency in the long term, which hurts exporters including companies making textiles and home appliances, as well as shipping firms and coal producers.
Cargo shippers retreated on a possible worsening outlook due to financial reform. China COSCO Holdings Co, Asia's biggest shipper, shed 0.8 percent to 5.18 yuan. COSCO Shipping Co, a unit of China COSCO, slumped 1.2 percent to 4.82 yuan. China Shipping Container Lines Co fell 1.3 percent to 3.07 yuan.
Coal producers also retreated on lower demand amid uncertain global prospects. China Shenhua Energy Co, the nation's largest coal producer, dropped 0.3 percent to 26.37 yuan. Datong Coal Industry Co plunged 1.8 percent to 13.03 yuan. Yanzhou Coal Mining Co shrank 0.4 percent to 23.32 yuan.
Shenyin Wanguo Securities cautioned investors that market sentiment has been driven recently by financial innovation and policy fine-tuning.
"But the index will not be spared from the economic slowdown, therefore a bear market is expected," the brokerage said on its microblog today. "Although financial innovation and policy easing may stimulate the market, investors need to stay prudent."
The Shanghai Composite Index dipped 0.09 percent to 2,357.03 points with turnover of 73.8 billion yuan (US$11.7 billion).
The yuan's trading band against the US dollar was doubled from 0.5 percent to 1 percent, effective today, according to a People's Bank of China statement on Saturday.
"The currency's one-way appreciation has come to an end," said Qu Hongbin earlier, a chief economist with HSBC. "With two-way fluctuations, exporters are relieved from the pressure of a stronger yuan."
Some analysts disagree with Qu and said the wider band speeds up the internationalization of yuan, and allows a slow appreciation of the currency in the long term, which hurts exporters including companies making textiles and home appliances, as well as shipping firms and coal producers.
Cargo shippers retreated on a possible worsening outlook due to financial reform. China COSCO Holdings Co, Asia's biggest shipper, shed 0.8 percent to 5.18 yuan. COSCO Shipping Co, a unit of China COSCO, slumped 1.2 percent to 4.82 yuan. China Shipping Container Lines Co fell 1.3 percent to 3.07 yuan.
Coal producers also retreated on lower demand amid uncertain global prospects. China Shenhua Energy Co, the nation's largest coal producer, dropped 0.3 percent to 26.37 yuan. Datong Coal Industry Co plunged 1.8 percent to 13.03 yuan. Yanzhou Coal Mining Co shrank 0.4 percent to 23.32 yuan.
Shenyin Wanguo Securities cautioned investors that market sentiment has been driven recently by financial innovation and policy fine-tuning.
"But the index will not be spared from the economic slowdown, therefore a bear market is expected," the brokerage said on its microblog today. "Although financial innovation and policy easing may stimulate the market, investors need to stay prudent."
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