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November 12, 2009

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Drop in bank loans hits key stock index

SHANGHAI'S stock market closed slightly lower yesterday after new bank loans dropped last month to only half that in September, as investors were concerned that a tighter credit policy might be in the pipeline.

The key Shanghai Composite Index dipped 0.11 percent, or 3.42 points, to close at 3,175.19. Turnover shrank to 144.5 billion yuan (US$21.2 billion) from 163 billion yuan on Tuesday.

Banking shares were among the losers after new loans in October tumbled 51 percent to 253 billion yuan from 516.7 billion yuan in September. China Merchants Bank Co, the nation's fifth-largest bank by market value, dropped 2.09 percent to 18.29 yuan, Shanghai Pudong Development Bank shed 0.98 percent to 23.26 yuan and China Construction Bank dipped 0.66 percent to 5.98 yuan.

Property developers were mixed although the National Development and Reform Commission, China's economic planner, said on Tuesday that housing prices in 70 major cities jumped the most in more than a year in October. Property prices have gained for a fifth month since June after they started to rebound on record lending and government stimulus measures. However investors were concerned that a tighter monetary supply and the expiry of the central government's stimulus measures at the end of the year might curb demand for property.

Shanghai Lujiazui Finance and Trade Zone Development Co lost 1.18 percent to 28.51 yuan. Shanghai Shimao Co jumped 4.24 percent to 18.21 yuan and China Vanke Co, the biggest listed domestic real estate developer, declined 1.32 percent to 11.98 yuan. Gemdale Corporation dropped 1.41 percent to finish at 16.10 yuan.


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