7-week low for Chinese stocks
By Xiao Feng |
August 6, 2011, Saturday
|
Print Edition
Print Edition
THE Chinese mainland's key stock index fell to its lowest level in seven weeks yesterday amid turbulence in neighboring Asian markets, which took their cues from plunging Western markets on concern that slumping US growth and Europe's debt crisis will push the world back into recession.
The Shanghai Composite Index fell 2.2 percent, its biggest daily loss in nine days, to 2,626.42 points, the lowest close since June 20. Nearly 90 percent of the stocks dropped. The gauge fell 2.8 percent this week, its worst week since May.
Markets worldwide were on edge over fiscal weakness in Italy and Spain and concern over the eurozone's ability to contain more crises, analysts said.
Hong Kong's Hang Seng Index fell 4.3 percent, its biggest plunge in more than 18 months, while Japan's Nikkei 225 Stock Average and South Korea's Kospi index both sank 3.7 percent.
The Dow Jones industrial average plunged 4.3 percent on Thursday, its worst one-day drop since the 2008 financial crisis, after the US Labor Department reported that weekly claims for unemployment benefits remained at 400,000 last week, showing limited improvement in the labor market.
"Worries for a slowdown in the world economy intensified after yields for Italian and Spanish bond exceeded 6 percent," said Wen Lijun, an analyst at Nanjing Securities. "Investors are also cautious before China's major official economic data that will be released on August 9. There are increasing expectations that the central bank may raise interest rates next week."
China's central bank said on Monday that it will not relax monetary policy in the second half of this year as the battle against inflation and property speculation continues.
Analysts at Guotai Junan Securities and Guohai Securities estimated that consumer inflation in July will come in at 6.2-6.4 percent, while the Industrial Bank and Soochow Securities said the inflation may reach 6.5-6.7 percent, above the 32-month high of 6.4 percent in June.
"The monetary policy will not ease in the second half of the year, except for some structural changes such as increasing lending to small and medium-sized enterprises, affordable housing and water projects," said Wu Tao, a fund manager for China Nature Asset Management Co. "You cannot expect market growth on looser policies."
Commodity producers led decliners after prices of oil and aluminum futures dropped. PetroChina, the country's top oil producer, fell 2.6 percent to 10.18 yuan.
"A stronger dollar and weaker European equity markets have weighed on the complex," the Standard Bank wrote in an investor note.
The Shanghai Composite Index fell 2.2 percent, its biggest daily loss in nine days, to 2,626.42 points, the lowest close since June 20. Nearly 90 percent of the stocks dropped. The gauge fell 2.8 percent this week, its worst week since May.
Markets worldwide were on edge over fiscal weakness in Italy and Spain and concern over the eurozone's ability to contain more crises, analysts said.
Hong Kong's Hang Seng Index fell 4.3 percent, its biggest plunge in more than 18 months, while Japan's Nikkei 225 Stock Average and South Korea's Kospi index both sank 3.7 percent.
The Dow Jones industrial average plunged 4.3 percent on Thursday, its worst one-day drop since the 2008 financial crisis, after the US Labor Department reported that weekly claims for unemployment benefits remained at 400,000 last week, showing limited improvement in the labor market.
"Worries for a slowdown in the world economy intensified after yields for Italian and Spanish bond exceeded 6 percent," said Wen Lijun, an analyst at Nanjing Securities. "Investors are also cautious before China's major official economic data that will be released on August 9. There are increasing expectations that the central bank may raise interest rates next week."
China's central bank said on Monday that it will not relax monetary policy in the second half of this year as the battle against inflation and property speculation continues.
Analysts at Guotai Junan Securities and Guohai Securities estimated that consumer inflation in July will come in at 6.2-6.4 percent, while the Industrial Bank and Soochow Securities said the inflation may reach 6.5-6.7 percent, above the 32-month high of 6.4 percent in June.
"The monetary policy will not ease in the second half of the year, except for some structural changes such as increasing lending to small and medium-sized enterprises, affordable housing and water projects," said Wu Tao, a fund manager for China Nature Asset Management Co. "You cannot expect market growth on looser policies."
Commodity producers led decliners after prices of oil and aluminum futures dropped. PetroChina, the country's top oil producer, fell 2.6 percent to 10.18 yuan.
"A stronger dollar and weaker European equity markets have weighed on the complex," the Standard Bank wrote in an investor note.
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