Banks lead decline in Shanghai shares
By Feng Jianmin |
July 20, 2011, Wednesday
|
Print Edition
Print Edition
SHANGHAI'S key stock index fell the most in five days as banks dropped on concerns they will start large-scale fundraising activities to replenish capital.
The benchmark Shanghai Composite Index lost 0.7 percent to 2,796.98 points.
China Merchants Bank, the country's sixth-largest lender, fell 1.4 percent to 12.80 yuan, its lowest close since June 20, after it announced a plan to raise as much as 35 billion yuan (US$5.4 billion) in a rights offer to shareholders on the Chinese mainland and Hong Kong. The Bank of China dipped 0.3 percent to 3.10 yuan.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," China International Capital Corp said in a report. "The rights offer will lift the ratio by 2 percentage points. It should sustain the bank's development for another two or three years, but the actual length will depend on the lender's performance and regulatory issues."
CICC said it expects the rights offer will drain 16.3 billion yuan from the yuan-denominated A-share market.
In the first half of this year, six listed banks, including the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Bank of China, raised a combined 143.5 billion yuan through issue of subordinated debt.
CITIC Bank, the Bank of Beijing and China Minsheng Banking Corp have also released plans to raise a combined 50.8 billion yuan through stock markets.
Analysts said the moves may reduce money available for other industries.
The benchmark Shanghai Composite Index lost 0.7 percent to 2,796.98 points.
China Merchants Bank, the country's sixth-largest lender, fell 1.4 percent to 12.80 yuan, its lowest close since June 20, after it announced a plan to raise as much as 35 billion yuan (US$5.4 billion) in a rights offer to shareholders on the Chinese mainland and Hong Kong. The Bank of China dipped 0.3 percent to 3.10 yuan.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," China International Capital Corp said in a report. "The rights offer will lift the ratio by 2 percentage points. It should sustain the bank's development for another two or three years, but the actual length will depend on the lender's performance and regulatory issues."
CICC said it expects the rights offer will drain 16.3 billion yuan from the yuan-denominated A-share market.
In the first half of this year, six listed banks, including the Industrial and Commercial Bank of China, the Agricultural Bank of China and the Bank of China, raised a combined 143.5 billion yuan through issue of subordinated debt.
CITIC Bank, the Bank of Beijing and China Minsheng Banking Corp have also released plans to raise a combined 50.8 billion yuan through stock markets.
Analysts said the moves may reduce money available for other industries.
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