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Financial sector leads index to 2.8% loss
By Ye Zhen |
March 28, 2013, Thursday
|
Online Edition
Online Edition
SHANGHAI stocks fell the most in more than three weeks as financial stocks tumbled after the banking regulator tightened oversight of wealth management products.
The benchmark Shanghai Composite Index plunged 2.8 percent, the biggest daily loss since March 4, to settle at 2,236.30 points. Trading volume was 107.6 billion yuan (US$17.4 billion).
Commercial banks now need to disclose to customers all information related to wealth management products, including the borrower, maturity, return ratio and transaction structure, and inform investors of any changes within five days, the China Banking Regulatory Commission said in a statement on its website.
The banking watchdog also required that off-balance sheet products sold to customers should be no more than 35 percent of a bank's total issued wealth-management products or no more than 4 percent of its total assets, whichever is lower.
Customer funds flowing to off-balance sheet products have been used by some banks to make loans in order to circumvent credit restrictions set by the People's Bank of China.
The new move targets the shadow banking network in an effort to control risks in the financial system, but it may erode banks' profitability, market watchers said.
"The requirement will increase banks' costs in managing these assets and is expected to reduce gross earnings in the banking industry by 1.3 percent in 2013," a Guotai Junan Securities report said.
Industrial Bank Co plunged the daily limit of 10 percent to 17.87 yuan. China Minsheng Banking Corp skidded 8.8 percent to 9.62 yuan. Shanghai Pudong Development Bank Co fell 6.9 percent to 10.02 yuan.
CITIC Securities, China's biggest listed brokerage, lost 3.8 percent to 12.28 yuan after posting a 66 percent drop in net profit last year. Haitong Securities Co dropped 5.8 percent to 10.23 yuan. Founder Securities Co shed 4.6 percent to 7.43 yuan.
China Life Insurance, the country's biggest insurer, fell 2 percent to 17.07 yuan after reporting a 40 percent decrease in net profit last year. Ping An Insurance Co, China's second largest insurer, lost 2.6 percent to 41.05 yuan. China Pacific Insurance (Group) Co retreated 2 percent to 18.31 yuan.
The benchmark Shanghai Composite Index plunged 2.8 percent, the biggest daily loss since March 4, to settle at 2,236.30 points. Trading volume was 107.6 billion yuan (US$17.4 billion).
Commercial banks now need to disclose to customers all information related to wealth management products, including the borrower, maturity, return ratio and transaction structure, and inform investors of any changes within five days, the China Banking Regulatory Commission said in a statement on its website.
The banking watchdog also required that off-balance sheet products sold to customers should be no more than 35 percent of a bank's total issued wealth-management products or no more than 4 percent of its total assets, whichever is lower.
Customer funds flowing to off-balance sheet products have been used by some banks to make loans in order to circumvent credit restrictions set by the People's Bank of China.
The new move targets the shadow banking network in an effort to control risks in the financial system, but it may erode banks' profitability, market watchers said.
"The requirement will increase banks' costs in managing these assets and is expected to reduce gross earnings in the banking industry by 1.3 percent in 2013," a Guotai Junan Securities report said.
Industrial Bank Co plunged the daily limit of 10 percent to 17.87 yuan. China Minsheng Banking Corp skidded 8.8 percent to 9.62 yuan. Shanghai Pudong Development Bank Co fell 6.9 percent to 10.02 yuan.
CITIC Securities, China's biggest listed brokerage, lost 3.8 percent to 12.28 yuan after posting a 66 percent drop in net profit last year. Haitong Securities Co dropped 5.8 percent to 10.23 yuan. Founder Securities Co shed 4.6 percent to 7.43 yuan.
China Life Insurance, the country's biggest insurer, fell 2 percent to 17.07 yuan after reporting a 40 percent decrease in net profit last year. Ping An Insurance Co, China's second largest insurer, lost 2.6 percent to 41.05 yuan. China Pacific Insurance (Group) Co retreated 2 percent to 18.31 yuan.
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