Index falls on likely disappointing data
By Lu Nengneng |
June 9, 2012, Saturday
|
Print Edition
Print Edition
SHANGHAI'S stock market fell yesterday, capping the biggest weekly drop this year, with China's first interest rate cuts since 2008 suggesting May economic data due for release today will be disappointing.
The Shanghai Composite Index dropped 0.51 percent to 2,281.45 points, bringing the weekly loss to 3.9 percent - the biggest since the five days ended on December 16.
From yesterday, China's benchmark one-year lending and deposit rates have fallen by 0.25 percentage point to 6.31 percent and 3.25 percent, respectively. To improve market liquidity, the central bank allows banks to set the borrowing rate as high as 1.1 times the benchmark and the lending rate as low as 80 percent of the benchmark, which is a 10-percentage-point decrease from the previous level.
Banks took the brunt of the decline as the liberalization of interest rates is likely to squeeze their profit margins. China Merchants Bank lost 3 percent to 10.92 yuan (US$1.71). China CITIC Bank sank 2.7 percent to 3.99 yuan.
Market analysts said the general market downturn was triggered by widespread speculation that the latest monetary easing is to fight a worse-than-expected economic slowdown.
Xu Xiaofeng, partner of AWE International Capital, said on Sina Weibo that today's data on investment, inflation and output could be very "ugly."
Metal and material producers also tumbled heavily yesterday after Guangfa Securities predicted growth in fixed-asset investment in May may drop to a 10-year low.
Jiangxi Copper, China's biggest producer of the metal, fell 0.9 percent to 24.48 yuan. Zijin Mining Group dropped 1.7 percent to 4.07 yuan.
The Shanghai Composite Index dropped 0.51 percent to 2,281.45 points, bringing the weekly loss to 3.9 percent - the biggest since the five days ended on December 16.
From yesterday, China's benchmark one-year lending and deposit rates have fallen by 0.25 percentage point to 6.31 percent and 3.25 percent, respectively. To improve market liquidity, the central bank allows banks to set the borrowing rate as high as 1.1 times the benchmark and the lending rate as low as 80 percent of the benchmark, which is a 10-percentage-point decrease from the previous level.
Banks took the brunt of the decline as the liberalization of interest rates is likely to squeeze their profit margins. China Merchants Bank lost 3 percent to 10.92 yuan (US$1.71). China CITIC Bank sank 2.7 percent to 3.99 yuan.
Market analysts said the general market downturn was triggered by widespread speculation that the latest monetary easing is to fight a worse-than-expected economic slowdown.
Xu Xiaofeng, partner of AWE International Capital, said on Sina Weibo that today's data on investment, inflation and output could be very "ugly."
Metal and material producers also tumbled heavily yesterday after Guangfa Securities predicted growth in fixed-asset investment in May may drop to a 10-year low.
Jiangxi Copper, China's biggest producer of the metal, fell 0.9 percent to 24.48 yuan. Zijin Mining Group dropped 1.7 percent to 4.07 yuan.
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