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Cash drain sees index off 2-month high
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SHANGHAI stocks yesterday fell from a two-month high after China’s central bank drained cash from the money market via repurchase deals for the first time in eight months.
The Shanghai Composite Index lost 0.77 percent, or 16.35 points, to 2,119.07.
“The market is facing technical resistance at the current level while the liquidity withdrawal by the central bank also depressed market sentiment,” said Shenyin Wanguo Securities.
The People’s Bank of China yesterday withdrew 48 billion yuan (US$7.9 billion) from the banking system through 14-day repo agreements at a yield of 3.8 percent, according to a statement on its website. That was the first fund withdrawal via repos since June.
But analysts said the move did not signal monetary tightening.
“It is normal for the central bank to drain liquidity after the Spring Festival holiday when most of the funds taken out from the banks before and during the holiday started to flow back,” Huang Xindong, analyst with GF Securities, said in a note yesterday.
Shenyin Wanguo sees sufficient market liquidity in the short term and a rebound in the market.
Financial shares dropped, with Shanghai Pudong Development Bank losing 2.7 percent to 9.26 yuan, the Industrial Bank off 3 percent to 9.49 yuan and China CITIC Bank falling 2.5 percent to 4.69 yuan.
Kweichow Moutai Co fell 2 percent to 147.01 yuan, and Shanxi Xinghuacun Fen Wine Factory Co shed 2.9 percent to close at 17.37 yuan.
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