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Index drops to 1-year low on tightening worry
By Lydia Chen |
August 22, 2011, Monday
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Online Edition
Online Edition
SHARES in Shanghai extended losses for a fifth day today and slumped to the lowest in more than a year as investors remained cautious amid concerns of more possible tightening from the government despite a global economic slowdown.
The Shanghai Composite Index declined 0.73 percent to 2,515.86 points, the lowest since July 19 last year when the index sank to 5,475.42. Turnover shrank to 65.5 billion yuan (US$10.23 billion), the second lowest this month after 64 billion on August 3.
Cement makers, ship producers and banks were among the top drags Media reports said cement prices in eastern China unexpectedly slipped in July while a former deputy governor at the People's Bank of China warned over last weekend that Chinese banks will face substantial stress in capital after the implementation of the Basel III accord.
Industrial and Commercial Bank of China Ltd, the world's largest lender, lost 1.21 percent to 4.08. Anhui Conch Cement Co shed 5.02 percent to 21.75 yuan. Guangzhou Shipyard International Co skipped 3.15 percent to 18.15 yuan.
Prices of cement posted an unexpected fall of 20 to 40 yuan per ton in eastern Chinese markets in recent weeks despite the fact that August is traditionally a high season for cement consumption, according to Caixun.com.
Meanwhile, Wu Xiaoling, a former deputy governor of China's central bank, has warned that banks of systematic importance will face a financing gap of 400 billion yuan to 500 billion yuan in the next five years, Wu said in an opening speech at the fifth Annual China Bankers Forum over the weekend, according to Xinhua news agency.
"The gap may force listed lenders to turn to the stock market for financing help, which would be great concerns for investors," said Shen Xiaochun, an analyst with Guohai Liangshi Futures.
Last year, 14 out of all the 16 listed lenders raised a record fund of 341.3 billion yuan altogether, taking up nearly 30 percent of total fund raised from stock markets in 2010, a key factor many analysts said behind a yearly tumble of almost 16 percent on the Shanghai benchmark index.
Meanwhile, China's money-market rate climbed to its highest level in almost three weeks today in Shanghai, raising concerns that China may take another interest rate hike soon.
China's central bank said earlier this month that it will not relax monetary policy in the second half of the year despite some expectations that it may ease tightening moves amid an economic slowdown in the United States and Europe.
China's liquidity remained tight although the central bank injected a total of 200 billion yuan to the economy over the past five weeks. It also raised yields on its three-month, one-year and three-year bills last week, fueling speculation of further monetary tightening.
The one-year yield now exceeds the central bank's benchmark rate for similar-term deposits, a sign policy rates may be increased
The seven-day repurchase rate, a gauge of funding availability in the financial system, rose 66.34 basis points to 4.96 percent as of 11.30am in Shanghai, according to the website of Shanghai Interbank Offered Rate.The rate earlier touched 4.98 percent, the highest level since August 2.
The Shanghai Composite Index declined 0.73 percent to 2,515.86 points, the lowest since July 19 last year when the index sank to 5,475.42. Turnover shrank to 65.5 billion yuan (US$10.23 billion), the second lowest this month after 64 billion on August 3.
Cement makers, ship producers and banks were among the top drags Media reports said cement prices in eastern China unexpectedly slipped in July while a former deputy governor at the People's Bank of China warned over last weekend that Chinese banks will face substantial stress in capital after the implementation of the Basel III accord.
Industrial and Commercial Bank of China Ltd, the world's largest lender, lost 1.21 percent to 4.08. Anhui Conch Cement Co shed 5.02 percent to 21.75 yuan. Guangzhou Shipyard International Co skipped 3.15 percent to 18.15 yuan.
Prices of cement posted an unexpected fall of 20 to 40 yuan per ton in eastern Chinese markets in recent weeks despite the fact that August is traditionally a high season for cement consumption, according to Caixun.com.
Meanwhile, Wu Xiaoling, a former deputy governor of China's central bank, has warned that banks of systematic importance will face a financing gap of 400 billion yuan to 500 billion yuan in the next five years, Wu said in an opening speech at the fifth Annual China Bankers Forum over the weekend, according to Xinhua news agency.
"The gap may force listed lenders to turn to the stock market for financing help, which would be great concerns for investors," said Shen Xiaochun, an analyst with Guohai Liangshi Futures.
Last year, 14 out of all the 16 listed lenders raised a record fund of 341.3 billion yuan altogether, taking up nearly 30 percent of total fund raised from stock markets in 2010, a key factor many analysts said behind a yearly tumble of almost 16 percent on the Shanghai benchmark index.
Meanwhile, China's money-market rate climbed to its highest level in almost three weeks today in Shanghai, raising concerns that China may take another interest rate hike soon.
China's central bank said earlier this month that it will not relax monetary policy in the second half of the year despite some expectations that it may ease tightening moves amid an economic slowdown in the United States and Europe.
China's liquidity remained tight although the central bank injected a total of 200 billion yuan to the economy over the past five weeks. It also raised yields on its three-month, one-year and three-year bills last week, fueling speculation of further monetary tightening.
The one-year yield now exceeds the central bank's benchmark rate for similar-term deposits, a sign policy rates may be increased
The seven-day repurchase rate, a gauge of funding availability in the financial system, rose 66.34 basis points to 4.96 percent as of 11.30am in Shanghai, according to the website of Shanghai Interbank Offered Rate.The rate earlier touched 4.98 percent, the highest level since August 2.
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