Key index edges up in spite of latest move
By Lydia Chen |
April 19, 2011, Tuesday
|
Print Edition
Print Edition
SHANGHAI'S stocks edged up yesterday in spite of China's latest tightening measure to rein in inflation.
The Shanghai Composite Index added 0.2 percent to 3,057.33, extending its rise of 0.3 percent last week when it ended at a five-month closing high.
Tourism and property shares helped the market to rise as liquidity remained ample in spite of the People's Bank of China's Sunday announcement that the reserve requirement ratio for banks would rise by 0.5 percentage point from Thursday. The hike comes less than two weeks after the latest interest rate rise.
"The rise itself now can hardly make any difference to the market because liquidity is more than enough," Zhong Hua, an analyst at Guotai Junan Securities said.
"The government will continue to use more tightening measures to drain excessive money which it injected into the market two years ago in order to keep the economy rolling amid the global financial crisis," he said.
China's foreign exchange reserves jumped an annual 24.4 percent to US$3.04 trillion through the end of March. The market expects nearly 450 billion yuan (US$68.92 billion) in central bank bills and repos to mature in the next two weeks.
The property sub-index gained 1.29 percent despite data showing housing prices nationwide grew slower in March after a slew of tightening measures was imposed.
Shanghai Shimao Co rose 3.47 percent to 15.49 yuan.
But Zhong cautioned that property developers may face increasing liquidity pressure if China continues to repeatedly raise interest rate and bank reserve rate, which may hurt their profits.
The Shanghai Composite Index added 0.2 percent to 3,057.33, extending its rise of 0.3 percent last week when it ended at a five-month closing high.
Tourism and property shares helped the market to rise as liquidity remained ample in spite of the People's Bank of China's Sunday announcement that the reserve requirement ratio for banks would rise by 0.5 percentage point from Thursday. The hike comes less than two weeks after the latest interest rate rise.
"The rise itself now can hardly make any difference to the market because liquidity is more than enough," Zhong Hua, an analyst at Guotai Junan Securities said.
"The government will continue to use more tightening measures to drain excessive money which it injected into the market two years ago in order to keep the economy rolling amid the global financial crisis," he said.
China's foreign exchange reserves jumped an annual 24.4 percent to US$3.04 trillion through the end of March. The market expects nearly 450 billion yuan (US$68.92 billion) in central bank bills and repos to mature in the next two weeks.
The property sub-index gained 1.29 percent despite data showing housing prices nationwide grew slower in March after a slew of tightening measures was imposed.
Shanghai Shimao Co rose 3.47 percent to 15.49 yuan.
But Zhong cautioned that property developers may face increasing liquidity pressure if China continues to repeatedly raise interest rate and bank reserve rate, which may hurt their profits.
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