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January 28, 2010

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Home » Business » Finance

Cautious investors sink key barometer

SHANGHAI'S key stock index yesterday fell to a three-month closing low in flat trading as investors remained cautious about possible tightening of monetary policies.

The benchmark Shanghai Composite Index lost 1.09 percent, or 32.79 points, to 2,986.61, closing below the 3,000 mark for the first time since October 30. Turnover dropped to 90.3 billion yuan (US$13.2 billion) from 109.3 billion yuan on Tuesday.

"Investors are reluctant to go into the market as they're still worried about an imminent raise in interest rates, and the market is likely to remain flat ahead of the Lunar New Year holiday," United Securities' Zhao Yang wrote in a research note.

Banks remained flat as investors speculated the central bank will move aggressively to rein in credit growth to prevent inflation and asset bubbles after it raised their reserve ratio.

The Industrial and Commercial Bank of China, the nation's biggest lender, lost 1.8 percent to 4.90 yuan, and Shanghai Pudong Development Bank fell 4.01 percent to 19.86 yuan. China Construction Bank shed 3.08 percent to 5.66 yuan.

Shenzhen Development Bank outperformed the sector with a loss of only 0.63 percent to 21.91 yuan, after saying it expected to report 700 percent profit growth for 2009 on a big drop in credit provisions and higher net interest and non-interest income.

Brokerages also declined. Everbright Securities sank 5.23 percent to 26.46 yuan, and Sinolink Securities lost 2.09 percent to 20.66 yuan.

Property shares were mixed. China Vanke Co edged up 0.76 percent to 9.29 yuan, and Gemdale Corp rose 1.12 percent to 11.73 yuan.


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