Index falls on fears of reserve ratio rise
By Feng Jianmin |
March 4, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S key stock index fell the most in a week yesterday on concerns the central bank may order banks to put aside more money from lending soon to combat inflation.
The Shanghai Composite Index fell 0.4 percent to 2,902.98. Turnover rose to 178 billion yuan (US$27 billion) from Wednesday's 165 billion yuan.
The China Securities Journal said yesterday that the central bank would soon raise the banking reserve ratio requirement after inflows of foreign capital exceeded January's expectations.
"The central bank could not sell its bills effectively recently because commercial banks demanded higher yields," said Huang Lijun, a Hongyuan Securities analyst. "Raising requirement reserve ratio is the best way to withdraw liquidity from financial institutions."
Investors will be cautious today, the last trading day of the week, on fears the government may announce tightening measures at the weekend, according to observers.
Metal producers led decliners. Jiangxi Copper Co dropped 2.6 percent to 39.82 yuan. Shandong Gold Mining Group Co lost 3.3 percent to 49.55 yuan.
Airlines fell after the International Air Transport Association cut its forecast for this year's profit in the industry to US$8.6 billion from US$9.1 billion projected three months ago as rising oil prices would damp travel demand.
China Southern Airlines, the country's largest carrier by fleet, fell 2.1 percent to 8.51 yuan. Air China, the nation's biggest international carrier, shed 1.8 percent to end at 11.47 yuan.
The Shanghai Composite Index fell 0.4 percent to 2,902.98. Turnover rose to 178 billion yuan (US$27 billion) from Wednesday's 165 billion yuan.
The China Securities Journal said yesterday that the central bank would soon raise the banking reserve ratio requirement after inflows of foreign capital exceeded January's expectations.
"The central bank could not sell its bills effectively recently because commercial banks demanded higher yields," said Huang Lijun, a Hongyuan Securities analyst. "Raising requirement reserve ratio is the best way to withdraw liquidity from financial institutions."
Investors will be cautious today, the last trading day of the week, on fears the government may announce tightening measures at the weekend, according to observers.
Metal producers led decliners. Jiangxi Copper Co dropped 2.6 percent to 39.82 yuan. Shandong Gold Mining Group Co lost 3.3 percent to 49.55 yuan.
Airlines fell after the International Air Transport Association cut its forecast for this year's profit in the industry to US$8.6 billion from US$9.1 billion projected three months ago as rising oil prices would damp travel demand.
China Southern Airlines, the country's largest carrier by fleet, fell 2.1 percent to 8.51 yuan. Air China, the nation's biggest international carrier, shed 1.8 percent to end at 11.47 yuan.
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