Key index drops 1.5% to end at lowest in over 3 weeks
By Lydia Chen |
April 26, 2011, Tuesday
|
Print Edition
Print Edition
SHARES in Shanghai tumbled yesterday and pulled the key stock index to the lowest in more than three weeks as concerns over inflation deepened in the market.
The Shanghai Composite Index lost 1.5 percent to end at 2,964.95, the lowest since March 31.
Investor concerns over the gloomy inflation outlook took their toll on blue chips in the cement, iron and steel sectors.
Yanzhou Coal Mining Co shed 4.8 percent to 33.79 yuan. Xinjiang Bayi Iron and Steel Co tumbled 6.9 percent to 13.89 yuan.
China's inflation will rise between 4.9 and 5.1 percent year on year in the second quarter, said Xu Lianzhong, an official of the National Development and Reform Commission.
Inflationary pressure seems not to be abating as costs of production keep rising and this in turn pushed up prices of food, commodities and services, Xu said.
Shen Xiaochun, an analyst at Guohai Liangshi Futures Co, said she believed regulators may use more financing measures such as allowing initial public offerings to channel liquidity away from the broader system.
"The authorities are now hoping financing tools could help to relieve some inflationary pressure," Shen said. "Using monetary tools repeatedly can hurt banks' profits and increase companies' borrowing costs."
China may allow IPOs to drain excessive liquidity that has been blamed as the main reason behind the stubbornly high inflation, according to Huang Dongsheng, an analyst at Guodu Securities Co.
Firms may need to wait half a year to launch IPOs as the China Securities Regulatory Commission has recently accelerated its approval process, according to Shanghai Securities News.
The Shanghai Composite Index lost 1.5 percent to end at 2,964.95, the lowest since March 31.
Investor concerns over the gloomy inflation outlook took their toll on blue chips in the cement, iron and steel sectors.
Yanzhou Coal Mining Co shed 4.8 percent to 33.79 yuan. Xinjiang Bayi Iron and Steel Co tumbled 6.9 percent to 13.89 yuan.
China's inflation will rise between 4.9 and 5.1 percent year on year in the second quarter, said Xu Lianzhong, an official of the National Development and Reform Commission.
Inflationary pressure seems not to be abating as costs of production keep rising and this in turn pushed up prices of food, commodities and services, Xu said.
Shen Xiaochun, an analyst at Guohai Liangshi Futures Co, said she believed regulators may use more financing measures such as allowing initial public offerings to channel liquidity away from the broader system.
"The authorities are now hoping financing tools could help to relieve some inflationary pressure," Shen said. "Using monetary tools repeatedly can hurt banks' profits and increase companies' borrowing costs."
China may allow IPOs to drain excessive liquidity that has been blamed as the main reason behind the stubbornly high inflation, according to Huang Dongsheng, an analyst at Guodu Securities Co.
Firms may need to wait half a year to launch IPOs as the China Securities Regulatory Commission has recently accelerated its approval process, according to Shanghai Securities News.
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