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City index tumbles the most in nearly a month
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Shanghai stocks tumbled the most in nearly four weeks after data showed China’s money supply increased at a slower rate in March and a bout of profit-taking dented heavyweight companies.
The key Shanghai Composite Index lost 1.4 percent, or 29.94 points, to 2,101.60. Turnover was 91.1 billion yuan (US$14.9 billion) at the trading close.
“The market was dragged down by heavyweight financial and steel firms that surged in previous sessions as investors locked in profits ahead of the release of first-quarter economic data,” Shenyin & Wanguo Securities said.
China’s M2, a broad measure of money supply, increased 12.1 percent year on year in March, compared with 13.3 percent in February, according to the People's Bank of China, the central bank.
“The March data is in line with recent signs of slower growth,” Zhang Zhiwei, chief China economist at Nomura Securities, said in a note today.
Zhang attributed slower M2 growth to slower deposit growth and reduced capital inflows as yuan depreciated by 1.2 percent against the US dollar in the month.
Nomura estimates that, without a cut in reserve requirement ratio, the M2 growth may slow further and China’s economic growth may drop below 7 percent in the second or third quarter.
Financial stocks declined the most after the central bank withdrew 93 billion yuan from the banking system today through 28-day repurchase agreements and another 79 billion yuan via 14-day contracts.
Shanghai Pudong Development Bank Co Ltd lost 2.7 percent to 9.85 yuan. Industrial Bank Co Ltd slumped 3 percent to 9.98 yuan. Hua Xia Bank Co Ltd decreased 2.7 percent to 8.51 yuan.
CITIC Securities slid 3.6 percent to 11.71 yuan. Sinolink Securities Co Ltd fell 4 percent to 20.74 yuan.
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