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Fears of rate hikes cloud market
By Feng Jianmin |
November 11, 2010, Thursday
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Print Edition
Print Edition
SHANGHAI stocks fell yesterday, led by blue chips on fears of another round of interest rate hikes after China's central bank on Tuesday surprised the market by auctioning its one-year bills at a higher yield than last week.
The Shanghai Composite Index lost 0.6 percent, or 19.6 points, to close at 3,115.4. Turnover was 248.9 billion yuan (US$37.5 billion), slightly lower than Tuesday's 250.3 billion yuan.
The People's Bank of China auctioned 32 billion yuan of one-year bills at a yield of 2.3437 percent, up from 2.2913 percent last week. It was seen as an effort to drain liquidity on concerns that large amounts of cash would flow into the financial system. The National Bureau of Statistics will unveil October's Consumer Price Index, a gauge of inflation, today.
"The central bank's action indicated that CPI in October may be higher than expected, probably exceeding 4 percent," said Li Xunlei, an analyst at Guotai Junan Securities. "From previous experiences, the raising of the yield of one-year bill is usually followed by interest rate hike for deposits."
Blue chips fell. Aluminum Corp of China lost 0.9 percent to 12.51 yuan. Zijin Mining Co, China's biggest gold miner, shed 1.7 percent to 10.30 yuan. Baoshan Iron and Steel Co declined 2 percent to close at 7.27 yuan.
The Shanghai Composite Index lost 0.6 percent, or 19.6 points, to close at 3,115.4. Turnover was 248.9 billion yuan (US$37.5 billion), slightly lower than Tuesday's 250.3 billion yuan.
The People's Bank of China auctioned 32 billion yuan of one-year bills at a yield of 2.3437 percent, up from 2.2913 percent last week. It was seen as an effort to drain liquidity on concerns that large amounts of cash would flow into the financial system. The National Bureau of Statistics will unveil October's Consumer Price Index, a gauge of inflation, today.
"The central bank's action indicated that CPI in October may be higher than expected, probably exceeding 4 percent," said Li Xunlei, an analyst at Guotai Junan Securities. "From previous experiences, the raising of the yield of one-year bill is usually followed by interest rate hike for deposits."
Blue chips fell. Aluminum Corp of China lost 0.9 percent to 12.51 yuan. Zijin Mining Co, China's biggest gold miner, shed 1.7 percent to 10.30 yuan. Baoshan Iron and Steel Co declined 2 percent to close at 7.27 yuan.
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