Index ends flat on rate surprise
By Feng Jianmin |
October 21, 2010, Thursday
|
Print Edition
Print Edition
SHANGHAI'S key stock index closed flat yesterday after the Chinese central bank sprung a surprise late Tuesday with its first interest rate rise in nearly three years. Insurers and coal producers gained while gold miners and property developers declined.
The Shanghai Composite Index edged up 0.07 percent, or 2.1 points, to close at 3,003.95, the highest since April 21. Turnover rose to 262 billion yuan (US$39.3 billion) from 200 billion yuan on Tuesday.
The People's Bank of China said on Tuesday that it would raise benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent. The increases became effective yesterday.
"We believe this was a surprise to the market but that it signifies policymakers' preemptive attitude towards tackling inflation, and likely suggests that they believe growth is well on track and risks of a global double-dip (recession) are low," said Goldman Sachs in a note.
China Life Insurance Co, the country's largest life insurer, rose 4.5 percent to 27.88 yuan. China Pacific Insurance Co climbed 6.3 percent to 28.67 yuan and Ping An Insurance Co grew 7 percent to 66.98 yuan.
Oil producers and gold miners led decliners as commodity prices fell after the rate hike drove up the US dollar.
The Shanghai Composite Index edged up 0.07 percent, or 2.1 points, to close at 3,003.95, the highest since April 21. Turnover rose to 262 billion yuan (US$39.3 billion) from 200 billion yuan on Tuesday.
The People's Bank of China said on Tuesday that it would raise benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent. The increases became effective yesterday.
"We believe this was a surprise to the market but that it signifies policymakers' preemptive attitude towards tackling inflation, and likely suggests that they believe growth is well on track and risks of a global double-dip (recession) are low," said Goldman Sachs in a note.
China Life Insurance Co, the country's largest life insurer, rose 4.5 percent to 27.88 yuan. China Pacific Insurance Co climbed 6.3 percent to 28.67 yuan and Ping An Insurance Co grew 7 percent to 66.98 yuan.
Oil producers and gold miners led decliners as commodity prices fell after the rate hike drove up the US dollar.
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