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Index hits nearly 3-year low amid liquidity fears
By Hu Xiaocen |
January 5, 2012, Thursday
|
Online Edition
Online Edition
THE Shanghai Composite Index tumbled to the lowest since March 2009 despite of banks' rally and fears of severer cash crunch before the Chinese New Year added to selling mood.
The key index slumped 0.97 percent or 20.94 points to 2,148.45 points at the close of trading, erasing gains made in the morning. The turnover was 46.6 billion yuan (US$7.37 billion). Stocks fell across the board.
Both Shanghai and Shenzhen markets saw more than one hundred stock prices plunge by 10 percent while 236 stocks dive by almost 8 percent.
Investors speculated that the central bank may further cut the reserve ratio after the New Year's holiday but that didn't realize and their worries arose over tightened liquidity in the markets.
"It's very unlikely that the economy will outperform the expectation. So the investors turned their focus on policy measures, such as the adjustment of the bank reserve ratio," said the Northeast Securities in a report today. "Capital supply will recover with improved liquidity, so investors need not be over pessimistic."
Shanghai Pudong Development Bank added 2.85 percent to 8.65 yuan. Bank of Nanjing led the rally of banks with a 3.4 percent jump to 9.44 yuan.
The key index slumped 0.97 percent or 20.94 points to 2,148.45 points at the close of trading, erasing gains made in the morning. The turnover was 46.6 billion yuan (US$7.37 billion). Stocks fell across the board.
Both Shanghai and Shenzhen markets saw more than one hundred stock prices plunge by 10 percent while 236 stocks dive by almost 8 percent.
Investors speculated that the central bank may further cut the reserve ratio after the New Year's holiday but that didn't realize and their worries arose over tightened liquidity in the markets.
"It's very unlikely that the economy will outperform the expectation. So the investors turned their focus on policy measures, such as the adjustment of the bank reserve ratio," said the Northeast Securities in a report today. "Capital supply will recover with improved liquidity, so investors need not be over pessimistic."
Shanghai Pudong Development Bank added 2.85 percent to 8.65 yuan. Bank of Nanjing led the rally of banks with a 3.4 percent jump to 9.44 yuan.
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