IMF’s lower forecast pulls shares down
Print Edition
SHANGHAI stocks yesterday fell for a third straight day yesterday after the International Monetary Fund cut its forecast for China’s economic growth.
The Shanghai Composite Index shed 2.77 percent to close at 4,112.21 points, extending losses to 8.2 percent since Monday — its biggest three-day retreat since June 2013.
The index has rallied 105 percent over the past year amid speculation the government will extend interest rate cuts and speed up mergers of state-owned firms.
The IMF cut its projection for China’s growth this year to 6.8 percent from the previous estimate of 7.1 percent made in January.
The IMF also said China needed reforms that “reorient the economy away from excessive reliance on real estate, heavy industry and external demand.” It added that fiscal stimulus should be China’s “first line of defense” to battle its economic slowdown.
The IMF also suggested the government should emphasize support for private consumption.
Last year, China’s economic growth of 7.4 percent was its slowest in 24 years, down from 7.7 percent in 2013.
Meanwhile, investors continued to take profits out of industrial blue chips.
Sinopec Oilfield Service Corp lost 9.78 percent to 8.21 yuan (US$1.32), China Shipbuilding Industry Co dropped 9.87 percent to 13.33 yuan, and China State Construction Engineering Corp fell by the daily 10 percent limit to 9.43 yuan.
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