Index falls on fears of tighter measures
By Lydia Chen |
January 15, 2011, Saturday
|
Print Edition
Print Edition
SHARES in Shanghai yesterday tumbled to languish near a 10-day low, dragged down by banks amid talks of possible monetary policy changes.
The Shanghai Composite Index lost 1.3 percent to close at 2,791.34. The index shed 1.7 percent this week, the most since the week ending December 24.
After the market close, the central bank ordered banks to set aside more reserves by 50 basis points from next Thursday. It's the first move this year after six increases in 2010.
A further tightening policy kept investors on the back foot, analysts said.
Banks were weak. The Bank of China fell 0.91 percent to 3.25 yuan (49 US cents). China Construction Bank declined 0.2 percent to 4.91 yuan.
"The market continues to be volatile because any kind of sensitive talks will cause jittery investors to be even more nervous," said Chen Kaiwei, an analyst of Changjiang Securities. "A raising of the required reserve ratio will be a better choice for the authority to rein in liquidity than an interest rate hike."
The People's Bank of China is working on a program to control money supply, Xia Bin, the head of the financial institute of China's State Council Development and Research Center, said this week. His remark came after data showed Chinese banks lent nearly 500 billion yuan in the first week of January, sparking talk that more tightening policies may be imposed.
The Shanghai Composite Index lost 1.3 percent to close at 2,791.34. The index shed 1.7 percent this week, the most since the week ending December 24.
After the market close, the central bank ordered banks to set aside more reserves by 50 basis points from next Thursday. It's the first move this year after six increases in 2010.
A further tightening policy kept investors on the back foot, analysts said.
Banks were weak. The Bank of China fell 0.91 percent to 3.25 yuan (49 US cents). China Construction Bank declined 0.2 percent to 4.91 yuan.
"The market continues to be volatile because any kind of sensitive talks will cause jittery investors to be even more nervous," said Chen Kaiwei, an analyst of Changjiang Securities. "A raising of the required reserve ratio will be a better choice for the authority to rein in liquidity than an interest rate hike."
The People's Bank of China is working on a program to control money supply, Xia Bin, the head of the financial institute of China's State Council Development and Research Center, said this week. His remark came after data showed Chinese banks lent nearly 500 billion yuan in the first week of January, sparking talk that more tightening policies may be imposed.
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