Key index falls to lowest in 4 months on measures fear
By Feng Jianmin |
January 21, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S key stock index dropped to the lowest in nearly four months on concerns that tighter monetary policies may be in the pipeline as stronger-than-expected economic growth will bring a rebound in inflation.
The Shanghai Composite Index shed 2.92 percent to 2,677.65 points, the lowest since September 30. Turnover rose to 96 billion yuan (US$14.7 billion) from 90 billion yuan on Wednesday.
The benchmark has dropped 4.6 percent this year.
The National Bureau of Statistics yesterday said China's gross domestic product rose by a bigger rate of 9.8 percent year on year in the fourth quarter of 2010 than the third quarter's 9.6 percent. The economy expanded 10.3 percent last year, the fastest pace in three years.
The Consumer Price Index, a main gauge of inflation, climbed 4.6 percent from a year earlier in December, moderating from November's 5.1 percent - the biggest gain in 28 months.
"The statistics did not surprise the market and was already reflected in recent market behavior," said Bian Fengwei, an analyst at Guotai Junan Securities. "Inflation cooled in December but it will certainly rise around Spring Festival because of bad weather and holiday demand."
He warned the market will continue to be weak until consumer prices reach their peak, which is likely to occur after March.
Several banks, including China Development Bank and the Bank of China, have halted lending for less important projects under regulatory pressure, the 21st Century Business Herald reported yesterday.
Insiders said loan quota is now being reviewed monthly and some banks have used up the loan quota for January, the newspaper said.
The Industrial and Commercial Bank of China, the country's biggest lender, fell 1.9 percent to 4.15 yuan.
Aluminum Corp of China, the nation's largest producer of the metal, rose 4.3 percent to 10.44 yuan after its parent said it will take a controlling stake in Guangxi Nonferrous in a bid to be a leader in the rare earth sector in five to 10 years.
The Shanghai Composite Index shed 2.92 percent to 2,677.65 points, the lowest since September 30. Turnover rose to 96 billion yuan (US$14.7 billion) from 90 billion yuan on Wednesday.
The benchmark has dropped 4.6 percent this year.
The National Bureau of Statistics yesterday said China's gross domestic product rose by a bigger rate of 9.8 percent year on year in the fourth quarter of 2010 than the third quarter's 9.6 percent. The economy expanded 10.3 percent last year, the fastest pace in three years.
The Consumer Price Index, a main gauge of inflation, climbed 4.6 percent from a year earlier in December, moderating from November's 5.1 percent - the biggest gain in 28 months.
"The statistics did not surprise the market and was already reflected in recent market behavior," said Bian Fengwei, an analyst at Guotai Junan Securities. "Inflation cooled in December but it will certainly rise around Spring Festival because of bad weather and holiday demand."
He warned the market will continue to be weak until consumer prices reach their peak, which is likely to occur after March.
Several banks, including China Development Bank and the Bank of China, have halted lending for less important projects under regulatory pressure, the 21st Century Business Herald reported yesterday.
Insiders said loan quota is now being reviewed monthly and some banks have used up the loan quota for January, the newspaper said.
The Industrial and Commercial Bank of China, the country's biggest lender, fell 1.9 percent to 4.15 yuan.
Aluminum Corp of China, the nation's largest producer of the metal, rose 4.3 percent to 10.44 yuan after its parent said it will take a controlling stake in Guangxi Nonferrous in a bid to be a leader in the rare earth sector in five to 10 years.
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