Index drops on rumors over board
By Feng Jianmin |
December 1, 2011, Thursday
|
Print Edition
Print Edition
SHANGHAI'S key stock index yesterday tumbled more than 3 percent, the most in nearly four months, as rumors surfaced that the city's long-awaited international board launch was imminent.
But analysts said the central bank's announcement after the market closed to cut the reserve requirement ratio for banks could boost the stock market.
The Shanghai Composite Index dropped 3.3 percent to 2,333.41 points, the largest daily decline since August 8.
Concerns that the launch of the international board, which will allow multinational companies to sell yuan-denominated shares on the Chinese mainland, will drain liquidity from the main stock market deepened after the rumors swirled that a proposal will be submitted to the securities regulator soon.
But officials from the Shanghai Stock Exchange dismissed the rumors as "ungrounded" shortly before the market closed.
"The rumor is a catalyst for the plunge today," said Kou Wenhong, an analyst at China Nature Asset Management Co. "Any slight bad news will hurt the market amid low sentiment."
But the sentiment may turn for the better after the People's Bank of China said it would cut the reserve requirement ratio - the first in three years - by 0.5 percentage point from next Monday. The cut may release an extra 400 billion yuan to banks.
"The long-expected cut in reserve requirements is likely to boost the stock market," said Zhang Weiming, a researcher at Pacific Securities. "It indicated that monetary policies could be easier next year."
Meanwhile, central bank adviser Xia Bin said yesterday that policy fine-tuning didn't mean a loosening of credit or changes in interest rates.
A measure for listed banks fell 2.3 percent yesterday after Standard & Poor's downgraded many top international banks, but upgraded the Bank of China and China Construction Bank due to a change in criteria.
However, BOC slid 1.7 percent to 2.88 yuan (45 US cents). CCB dipped 0.9 percent to end at 4.69 yuan.
But analysts said the central bank's announcement after the market closed to cut the reserve requirement ratio for banks could boost the stock market.
The Shanghai Composite Index dropped 3.3 percent to 2,333.41 points, the largest daily decline since August 8.
Concerns that the launch of the international board, which will allow multinational companies to sell yuan-denominated shares on the Chinese mainland, will drain liquidity from the main stock market deepened after the rumors swirled that a proposal will be submitted to the securities regulator soon.
But officials from the Shanghai Stock Exchange dismissed the rumors as "ungrounded" shortly before the market closed.
"The rumor is a catalyst for the plunge today," said Kou Wenhong, an analyst at China Nature Asset Management Co. "Any slight bad news will hurt the market amid low sentiment."
But the sentiment may turn for the better after the People's Bank of China said it would cut the reserve requirement ratio - the first in three years - by 0.5 percentage point from next Monday. The cut may release an extra 400 billion yuan to banks.
"The long-expected cut in reserve requirements is likely to boost the stock market," said Zhang Weiming, a researcher at Pacific Securities. "It indicated that monetary policies could be easier next year."
Meanwhile, central bank adviser Xia Bin said yesterday that policy fine-tuning didn't mean a loosening of credit or changes in interest rates.
A measure for listed banks fell 2.3 percent yesterday after Standard & Poor's downgraded many top international banks, but upgraded the Bank of China and China Construction Bank due to a change in criteria.
However, BOC slid 1.7 percent to 2.88 yuan (45 US cents). CCB dipped 0.9 percent to end at 4.69 yuan.
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