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Market continues to grow after rate rise
By Feng Jianmin |
October 20, 2010, Wednesday
|
Online Edition
Online Edition
SHANGHAI'S key stock index closed slightly higher today after the central bank sprung a surprise yesterday evening with its first interest rate rise in nearly three years. Insurers gained while property developers declined. Banks were mixed.
The benchmark Shanghai Composite Index edged up 0.65 percent, or 19.6 points, to close at 3,021.4. Turnover rose to 262 billion yuan (US$39.3 billion) from yesterday's 200 billion yuan.
The People's Bank of China said that it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.
Major global stock markets dropped overnight on assumptions that China's rate boost will damp its economy, which was seen as a key driver of the global economy. Dow Jones fell 1.48 percent to below 11,000 points, while the UK FTSE was 0.67 percent lower.
"The act is risky as the economic recovery was slow, but not without advantages," said Zhang Wengang, an analyst with Nanjing Securities Co. "It will help to create healthier economy by relieving capital from the property market to other industries."
Insurers led the gainers.
"We believe this rate move is overall fundamentally positive for the A-share equity investments of China insurers in the mid-term," said Goldman Sachs in a note. "As we see this is as a market-oriented tightening measure meant to deal with structurally low real loan/deposit rates in order to ease assets/CPI reflation pressure."
China Life Insurance Co, the country's largest life insurance company, rose 4.5 percent to 27.88 yuan. China Pacific Insurance Co, advanced 6.3 percent to 28.67 yuan. Ping An Insurance Co, grew 7 percent to 66.98 yuan.
Property developers dropped. China Merchants Property Development Co fell 7.5 percent to 18.43 yuan. China Vanke declined 6.1 percent to 8.92 yuan. Poly Real Estate Co retreated 7.8 percent to 13.98 yuan.
Banks were mixed. Bank of China dipped 0.3 percent to 3.61 yuan. China Construction Bank was unchanged at 5.29 yuan. China Merchants Bank grew 1.55 percent to 15.73 yuan.
The benchmark Shanghai Composite Index edged up 0.65 percent, or 19.6 points, to close at 3,021.4. Turnover rose to 262 billion yuan (US$39.3 billion) from yesterday's 200 billion yuan.
The People's Bank of China said that it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.
Major global stock markets dropped overnight on assumptions that China's rate boost will damp its economy, which was seen as a key driver of the global economy. Dow Jones fell 1.48 percent to below 11,000 points, while the UK FTSE was 0.67 percent lower.
"The act is risky as the economic recovery was slow, but not without advantages," said Zhang Wengang, an analyst with Nanjing Securities Co. "It will help to create healthier economy by relieving capital from the property market to other industries."
Insurers led the gainers.
"We believe this rate move is overall fundamentally positive for the A-share equity investments of China insurers in the mid-term," said Goldman Sachs in a note. "As we see this is as a market-oriented tightening measure meant to deal with structurally low real loan/deposit rates in order to ease assets/CPI reflation pressure."
China Life Insurance Co, the country's largest life insurance company, rose 4.5 percent to 27.88 yuan. China Pacific Insurance Co, advanced 6.3 percent to 28.67 yuan. Ping An Insurance Co, grew 7 percent to 66.98 yuan.
Property developers dropped. China Merchants Property Development Co fell 7.5 percent to 18.43 yuan. China Vanke declined 6.1 percent to 8.92 yuan. Poly Real Estate Co retreated 7.8 percent to 13.98 yuan.
Banks were mixed. Bank of China dipped 0.3 percent to 3.61 yuan. China Construction Bank was unchanged at 5.29 yuan. China Merchants Bank grew 1.55 percent to 15.73 yuan.
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