Key index drops the most in 2 months
By Pan Xiaoyi |
January 18, 2011, Tuesday
|
Print Edition
Print Edition
SHANGHAI'S key stock index yesterday plunged the most in two months, after the central government further tightened policies by raising the reserve requirement ratio for the seventh time since 2010.
The Shanghai Composite Index tumbled 3.03 percent to 2,706.66, the biggest daily loss since November 16. Turnover was 104.8 billion yuan (US$16 billion).
Analysts said investors may remain cautious before major economic data for the fourth quarter of 2010 are released on Thursday, including gross domestic product and Consumer Price Index. The inflation level will be vital in fine-tuning macro-policies in the first quarter of this year.
After the market closed last Friday, the People's Bank of China announced it will raise the reserve requirement ratio on banks by 0.5 percentage point effective from Thursday, the fourth hike in more than two months to rein in inflationary risks. China's biggest banks will face a record high 19.5 percent ratio and the move is set to freeze nearly 400 billion yuan in the market.
China Construction Bank fell 3.9 percent to 4.72 yuan and Shanghai Pudong Development Bank dropped 4 percent to 12.62 yuan.
"Investors are getting more negative toward market liquidity as the central bank sticks firmly to reining in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "Continued pressure from inflation in the first quarter is also eroding market sentiment."
Real estate prices in 70 major Chinese mainland cities continued to climb 6.4 percent last month annually for the 19th consecutive month, the National Bureau of Statistics said yesterday, fanning talk of more stringent steps to rein in property prices.
Poly Real Estate Group, China's second-largest listed property developer, shed 8.7 percent to 13.6 yuan. Gemdale Corp, the fourth biggest, lost 8.2 percent to 6.73 yuan.
The Shanghai Composite Index tumbled 3.03 percent to 2,706.66, the biggest daily loss since November 16. Turnover was 104.8 billion yuan (US$16 billion).
Analysts said investors may remain cautious before major economic data for the fourth quarter of 2010 are released on Thursday, including gross domestic product and Consumer Price Index. The inflation level will be vital in fine-tuning macro-policies in the first quarter of this year.
After the market closed last Friday, the People's Bank of China announced it will raise the reserve requirement ratio on banks by 0.5 percentage point effective from Thursday, the fourth hike in more than two months to rein in inflationary risks. China's biggest banks will face a record high 19.5 percent ratio and the move is set to freeze nearly 400 billion yuan in the market.
China Construction Bank fell 3.9 percent to 4.72 yuan and Shanghai Pudong Development Bank dropped 4 percent to 12.62 yuan.
"Investors are getting more negative toward market liquidity as the central bank sticks firmly to reining in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "Continued pressure from inflation in the first quarter is also eroding market sentiment."
Real estate prices in 70 major Chinese mainland cities continued to climb 6.4 percent last month annually for the 19th consecutive month, the National Bureau of Statistics said yesterday, fanning talk of more stringent steps to rein in property prices.
Poly Real Estate Group, China's second-largest listed property developer, shed 8.7 percent to 13.6 yuan. Gemdale Corp, the fourth biggest, lost 8.2 percent to 6.73 yuan.
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