Key index declines to lowest level
By Chen Li |
June 10, 2011, Friday
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Print Edition
Print Edition
SHANGHAI stocks yesterday fell for the first time in four days, driving the key index to the lowest level in more than four months, amid concerns inflation will persist and tightening policies are not likely to be relaxed before inflation eases.
The Shanghai Composite Index declined 1.7 percent to end at 2,703.35, the lowest since January 25.
Zhang Xiang, an analyst at Guodu Securities, said any possible rebound in the market was limited because of multiple concerns about the country's economy, inflation and company profit growth.
"The inflation pressure is not likely to ease soon, which means tightening will still be the main theme," Zhang said.
Investors need time to determine if company profits are growing against a backdrop of tightening, Zhang added.
Despite banks largely trading at valuations well below their historical levels, investors dumped them in heavy volume in speculation there would be further weaknesses.
Chinese banks have racked up losses in recent weeks after media reports revealed a plan to clean up local government debt, which investors saw may pose risks for lenders. There were also concerns over further tightening, fundraising to meet capital adequacy requirements and impact from the expiry of lock-up periods for institutional investors of some banks.
The Industrial and Commercial Bank of China, the country's biggest lender, fell 1.1 percent to 4.37 yuan.
Huaxin Cement Co tumbled 9.5 percent to 21.37 yuan, the biggest falle since February 2009. Shareholder Huaxin Group sold 9.1 million shares, or a 1.13 percent stake, in the firm in block trades from May 24 to Tuesday, the cement maker said yesterday.
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