Market falls for a second day
By Ding Yining and Feng Jianmin |
August 30, 2011, Tuesday
|
Print Edition
Print Edition
THE Shanghai market yesterday fell for the second day after financial shares and property developers declined amid concerns over further tightening of monetary policy.
The Shanghai Composite Index dipped 1.4 percent to 2,576.41 points, the biggest loss in more than a week.
Reuters reported on Friday that China has ordered banks to include margin deposits in their reserves held at the central bank to mop up excessive liquidity.
ABC-CA Fund Management said: "This will raise the cost of borrowing and affect the stock market negatively. Meanwhile, economic growth is still slowing due to sluggish expansion in the steel, cement and power sectors."
Barclays analysts estimate the new requirement will drain about 900 billion yuan (US$141 billion) from the banking system.
"The measure aims to regulate banks' off-balance-sheet business," said Wang Tao, chief economist of UBS China. "Liquidity frozen by including margin deposits in required reserves is far less than the inflow of foreign capital and bonds that will mature in the next few months."
China Construction Bank fell 1.3 percent to 4.50 yuan. Shanghai Pudong Development Bank dropped 3 percent to 9.18 yuan. China Life Insurance was down 2.3 percent to 15.87 yuan.
Property developers also depressed the market after the Beijing Times newspaper reported China will step up efforts to curb housing speculation. The government is setting up a registration and database system to track the number of homes owned by individuals in more than 40 cities.
Poly Real Estate sank 3.5 percent to 10.92 yuan. Gemdale dropped 3.4 percent to 6.17 yuan.
The Shanghai Composite Index dipped 1.4 percent to 2,576.41 points, the biggest loss in more than a week.
Reuters reported on Friday that China has ordered banks to include margin deposits in their reserves held at the central bank to mop up excessive liquidity.
ABC-CA Fund Management said: "This will raise the cost of borrowing and affect the stock market negatively. Meanwhile, economic growth is still slowing due to sluggish expansion in the steel, cement and power sectors."
Barclays analysts estimate the new requirement will drain about 900 billion yuan (US$141 billion) from the banking system.
"The measure aims to regulate banks' off-balance-sheet business," said Wang Tao, chief economist of UBS China. "Liquidity frozen by including margin deposits in required reserves is far less than the inflow of foreign capital and bonds that will mature in the next few months."
China Construction Bank fell 1.3 percent to 4.50 yuan. Shanghai Pudong Development Bank dropped 3 percent to 9.18 yuan. China Life Insurance was down 2.3 percent to 15.87 yuan.
Property developers also depressed the market after the Beijing Times newspaper reported China will step up efforts to curb housing speculation. The government is setting up a registration and database system to track the number of homes owned by individuals in more than 40 cities.
Poly Real Estate sank 3.5 percent to 10.92 yuan. Gemdale dropped 3.4 percent to 6.17 yuan.
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