Liquidity fears send index on long skid
Print Edition
Shanghai stocks yesterday fell for the ninth consecutive day, the longest losing streak in nearly two decades, due to market jitters about a cash crunch even though the central bank acted to inject liquidity.
The benchmark Shanghai Composite Index sank 2.02 percent to 2,084.79 points.
The index ended 5.07 percent lower for the week, the biggest weekly loss in over two years.
“Tight liquidity is a main drag on the A-share market,” Shenyin and Wanguo Securities said.
The People’s Bank of China made a cash injection on Thursday through short-term liquidity tools, it said on its Weibo microblog, without disclosing the scale of the operation.
However, the move failed to ease the worst liquidity crunch since June as the seven-day Shanghai Interbank Offered Rate, a gauge of funding costs, rose for the sixth straight day yesterday, up by 118.2 basis points to 7.7 percent.
The rate was the highest since June when the country’s worst liquidity crunch in years sent the Shanghai Composite plunging 14 percent that month.
Zhang Zhiwei, chief economist for China at Nomura Holdings Inc, said the PBOC’s move is likely to prevent a repeat of the June liquidity squeeze.
Lenders declined, with China Minsheng Banking Corp falling 1.3 percent to 7.78 yuan (US$1.28). The Industrial Bank sank 3.3 percent to 9.79 yuan.
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