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Banks and property firms drop amid tightening concern
By Feng Jianmin |
November 9, 2010, Tuesday
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Online Edition
Online Edition
SHANGHAI'S stock market fell today following weak global markets overnight as European debt crisis worsened. Gold producers gained while property developers and banks lost on concerns about tighter monetary policies to hedge against inflows of hot money.
The benchmark Shanghai Composite Index lost 0.8 percent, or 24.5 points, to close at 3,135. Turnover was 250.3 billion yuan (US$37.6 billion), slightly lower than yesterday's 259.2 billion yuan.
The Shenzhen Component Index, which tracks the smaller domestic market in southern China, was down 0.7 percent at 13,714.3 points. An index tracking the small and medium caps grew 0.6 percent to a record high of 7,873.4.
The difference of yield between Irish and German 10-year bonds ballooned to a record 557 basis points, while that of the Portugal also increased to 440 basis points, the most since at least 1997. That means if the German bond, which emerged as a stable bond during the crisis, carries an interest rate of 3 percent, a comparable bond in Portugal would carry a rate of 7.4 percent.
The high cost for these countries to raise funds through selling bonds aroused concerns that the crisis may lead to more money printing by European countries, thus leading to worsening inflation.
Gold producers led the gainers after gold bullion futures for December delivery jumped to a record high at above US$1,400 per ounce last night on the New York market. Shandong Gold Mining Co went up 3.7 percent to 66.29 yuan. Zhongjin Gold Co rose 2.4 percent to 47.38 yuan. Zijin Mining Co, the country's largest gold producer, was 2.3 percent higher at 10.48 yuan.
China has not yet seen large inflows of hot money, but some major economies' monetary easing policies could unleash capital that flows into the country, Deng Xianhong, deputy chief of the State Administration of Foreign Exchange, told China Central Television last night.
Deng said that hot money may bet on yuan appreciation as well as strong stock and property markets. Banks should play an important role in preventing inflows of hot money by implementing stricter regulatory measures.
Banks and property developers retreated on concerns about less liquidity under possible tightening measures. Agricultural Bank of China went down 2 percent to 2.83 yuan. China Merchants Bank lost 2.5 percent to 15.17 yuan. Bank of Communications declined 1.7 percent to 6.26 yuan.
China Vanke, China's largest property developer, dropped 4 percent to 9.50 yuan. Poly Real Estate Co slid 4 percent to 14.47 yuan. China Merchants Property Development Co also shed 4 percent to 18.83 yuan.
The benchmark Shanghai Composite Index lost 0.8 percent, or 24.5 points, to close at 3,135. Turnover was 250.3 billion yuan (US$37.6 billion), slightly lower than yesterday's 259.2 billion yuan.
The Shenzhen Component Index, which tracks the smaller domestic market in southern China, was down 0.7 percent at 13,714.3 points. An index tracking the small and medium caps grew 0.6 percent to a record high of 7,873.4.
The difference of yield between Irish and German 10-year bonds ballooned to a record 557 basis points, while that of the Portugal also increased to 440 basis points, the most since at least 1997. That means if the German bond, which emerged as a stable bond during the crisis, carries an interest rate of 3 percent, a comparable bond in Portugal would carry a rate of 7.4 percent.
The high cost for these countries to raise funds through selling bonds aroused concerns that the crisis may lead to more money printing by European countries, thus leading to worsening inflation.
Gold producers led the gainers after gold bullion futures for December delivery jumped to a record high at above US$1,400 per ounce last night on the New York market. Shandong Gold Mining Co went up 3.7 percent to 66.29 yuan. Zhongjin Gold Co rose 2.4 percent to 47.38 yuan. Zijin Mining Co, the country's largest gold producer, was 2.3 percent higher at 10.48 yuan.
China has not yet seen large inflows of hot money, but some major economies' monetary easing policies could unleash capital that flows into the country, Deng Xianhong, deputy chief of the State Administration of Foreign Exchange, told China Central Television last night.
Deng said that hot money may bet on yuan appreciation as well as strong stock and property markets. Banks should play an important role in preventing inflows of hot money by implementing stricter regulatory measures.
Banks and property developers retreated on concerns about less liquidity under possible tightening measures. Agricultural Bank of China went down 2 percent to 2.83 yuan. China Merchants Bank lost 2.5 percent to 15.17 yuan. Bank of Communications declined 1.7 percent to 6.26 yuan.
China Vanke, China's largest property developer, dropped 4 percent to 9.50 yuan. Poly Real Estate Co slid 4 percent to 14.47 yuan. China Merchants Property Development Co also shed 4 percent to 18.83 yuan.
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