China shares fall despite PBOC’s action
Print Edition
CHINA’S stock markets fell yesterday despite the central bank announcing the release of about 700 billion yuan (US$108 billion) to boost lending for small businesses, with airlines particularly hit as the yuan continued to depreciate.
The markets opened higher after the People’s Bank of China cut the required reserve ratio by 50 basis points for some banks on Sunday.
During the afternoon session the markets erased early gains, with the Shanghai Composite Index falling 1.05 percent or 30.42 points to close at 2859.34.
The Shenzhen Component Index shed 0.90 percent to 9,324.83 points, while the Nasdaq-style ChiNext enterprise board dipped 0.72 percent to close at 1,538.57.
Airlines flew into turbulence when the yuan fell for an eighth day. Air China Ltd, one of the country’s top three airlines, dropped by the maximum cap of 10 percent to close at 9.78 yuan.
The markets were already clouded by the uncertainty over a possible full-blown Sino-US trade war and a tit-for-tat dispute between the world’s largest two economies last week. On Sunday, President Donald Trump called on other countries to end all trade barriers on his Twitter account, according to a CNBC report.
Gao Ting, head of China Strategy at UBS Securities, said in a latest report that the brokerage believed A-share investors were overly pessimistic and overlooked fine-tuning policies like the targeted reserve requirement ratio cuts.
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