Less liquidity fuels concerns
By Ye Zhen |
June 29, 2012, Friday
|
Print Edition
Print Edition
SHANGHAI'S stock market yesterday fell to a five-month low amid concerns about China's weakening economy and less liquidity although the government has moved to pump in more funds in the market.
The Shanghai Composite Index lost 0.95 percent to end at 2,195.84 points, its seventh straight day of losses. The gauge, which has plunged 7.4 percent this month, erased this year's gain.
"The market is facing capital outflows as a result of a gloomy economy, stuttering real estate market and diminishing hopes for a yuan appreciation," Datong Securities said in a report yesterday.
The People's Bank of China, the central bank, released 30 billion yuan through 14-day reverse repurchase agreements, following an injection of 95 billion yuan on Tuesday.
"Apart from the open market operations, the central bank should further cut the bank reserve requirement ratio to alleviate a liquidity crunch," said Chen Ying, a researcher at Sealand Securities, who expects the central bank to cut the ratio early next month.
The Industrial and Commercial Bank of China Ltd, the nation's largest lender, edged down 0.5 percent to 3.92 yuan (62 US cents) while China Construction Bank fell 1 percent to 4.17 yuan.
Dongfang Electric Corp paced a decline for industrial companies on concern slowing growth will sap demand.
The second-biggest maker of power equipment in China tumbled 9.3 percent to 17.63 yuan, the biggest fall this year. Shanghai Electric Group Co, the nation?s biggest, lost 4.6 percent to 4.61 yuan.
The Shanghai Composite Index lost 0.95 percent to end at 2,195.84 points, its seventh straight day of losses. The gauge, which has plunged 7.4 percent this month, erased this year's gain.
"The market is facing capital outflows as a result of a gloomy economy, stuttering real estate market and diminishing hopes for a yuan appreciation," Datong Securities said in a report yesterday.
The People's Bank of China, the central bank, released 30 billion yuan through 14-day reverse repurchase agreements, following an injection of 95 billion yuan on Tuesday.
"Apart from the open market operations, the central bank should further cut the bank reserve requirement ratio to alleviate a liquidity crunch," said Chen Ying, a researcher at Sealand Securities, who expects the central bank to cut the ratio early next month.
The Industrial and Commercial Bank of China Ltd, the nation's largest lender, edged down 0.5 percent to 3.92 yuan (62 US cents) while China Construction Bank fell 1 percent to 4.17 yuan.
Dongfang Electric Corp paced a decline for industrial companies on concern slowing growth will sap demand.
The second-biggest maker of power equipment in China tumbled 9.3 percent to 17.63 yuan, the biggest fall this year. Shanghai Electric Group Co, the nation?s biggest, lost 4.6 percent to 4.61 yuan.
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