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Market slumps 2.1% in morning session
By Pan Xiaoyi |
January 17, 2011, Monday
|
Online Edition
Online Edition
SHANGHAI'S key stock index plunged more than 2 percent in the morning session, setting for the biggest daily loss in two months, after the central government further tightened policies by raising the reserve requirement ratio again.
The benchmark Shanghai Composite Index tumbled 2.1 percent to 2,732.76 points. Turnover stood at 52.8 billion yuan (US$8 billion). Losers outnumbered gainers 800 by 55 while 3 remained unchanged.
The Shenzhen Composite Index, which tracks the smaller mainland market, slumped 3.38 percent to 1,191.09 points.
Market analysts said market investors may remain cautious before major economic data are released on Thursday, including the gross domestic product growth and the consumer price index in the fourth quarter in 2010. In particular, the inflation level will be vital in setting tones of the macro-policy measures in the first quarter, analyst said.
The People's Bank of China raised the reserve requirement ratio on banks will by 0.5 percentage points from Thursday, the fourth rise in more than two months to rein in inflationary risks.
China's biggest banks will face a record high of a 19.5 percent requirement and the move is expected to freeze nearly 400 billon yuan in the market.
The announcement was made on late Friday when the market is closed.
"Investors seem more negative towards the market liquidity as the central bank sticks firmly to rein in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "And continuous pressure from inflation in the first quarter keeps pounding the market."
Property shares led the decliners as real estate developers suffered the most from tightened cash flows. Shanghai Shimao Co dived 9.3 percent to 13.78 yuan. Poly Real Estate Group, the country's second largest property developer, retreated 6.4 percent to 13.94 yuan. Gemdale Corp withdrew 5.5 percent to 6.93 yuan.
The benchmark Shanghai Composite Index tumbled 2.1 percent to 2,732.76 points. Turnover stood at 52.8 billion yuan (US$8 billion). Losers outnumbered gainers 800 by 55 while 3 remained unchanged.
The Shenzhen Composite Index, which tracks the smaller mainland market, slumped 3.38 percent to 1,191.09 points.
Market analysts said market investors may remain cautious before major economic data are released on Thursday, including the gross domestic product growth and the consumer price index in the fourth quarter in 2010. In particular, the inflation level will be vital in setting tones of the macro-policy measures in the first quarter, analyst said.
The People's Bank of China raised the reserve requirement ratio on banks will by 0.5 percentage points from Thursday, the fourth rise in more than two months to rein in inflationary risks.
China's biggest banks will face a record high of a 19.5 percent requirement and the move is expected to freeze nearly 400 billon yuan in the market.
The announcement was made on late Friday when the market is closed.
"Investors seem more negative towards the market liquidity as the central bank sticks firmly to rein in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "And continuous pressure from inflation in the first quarter keeps pounding the market."
Property shares led the decliners as real estate developers suffered the most from tightened cash flows. Shanghai Shimao Co dived 9.3 percent to 13.78 yuan. Poly Real Estate Group, the country's second largest property developer, retreated 6.4 percent to 13.94 yuan. Gemdale Corp withdrew 5.5 percent to 6.93 yuan.
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