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Index drops in morning as banks set to drain market capital
By Feng Jianmin |
July 19, 2011, Tuesday
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Online Edition
Online Edition
SHANGHAI'S key stock index fell for the second day in the morning session led by banks on concerns that they will start large scale of fund-raising activities for insufficiency of funds.
The benchmark Shanghai Composite Index lost 0.47 percent to 2,803.53 points. Turnover fell to 62.8 billion yuan (US$971 million) from yesterday morning's 73.1 billion yuan.
Banks led the decliners. China Merchants Bank fell 1 percent to 12.85 yuan after it announced its plan to raise as much as 35 billion yuan in a rights offer to shareholders in China and Hong Kong.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," said China International Capital Corp in a report. "The fund-raising will lift the ratio by 2 percentage points. It should be able to sustain the bank's development for another two or three years, but the actual length will depend on bank's performance and regulatory issues."
Analysts worry that fund-raising activities of banks to hedge capital insufficiency under tight monetary policies will pare the amount of funds available for other industries.
Gold miners extended previous gains after gold bullion price hit a 31-year high of US$1,602.40 in New York yesterday. Zijin Mining Co rose 1 percent to 5.83 yuan.
The benchmark Shanghai Composite Index lost 0.47 percent to 2,803.53 points. Turnover fell to 62.8 billion yuan (US$971 million) from yesterday morning's 73.1 billion yuan.
Banks led the decliners. China Merchants Bank fell 1 percent to 12.85 yuan after it announced its plan to raise as much as 35 billion yuan in a rights offer to shareholders in China and Hong Kong.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," said China International Capital Corp in a report. "The fund-raising will lift the ratio by 2 percentage points. It should be able to sustain the bank's development for another two or three years, but the actual length will depend on bank's performance and regulatory issues."
Analysts worry that fund-raising activities of banks to hedge capital insufficiency under tight monetary policies will pare the amount of funds available for other industries.
Gold miners extended previous gains after gold bullion price hit a 31-year high of US$1,602.40 in New York yesterday. Zijin Mining Co rose 1 percent to 5.83 yuan.
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