PBOC’s stance pulls index lower
Print Edition
Shanghai stocks fell yesterday after China’s central bank signaled a tighter monetary stance to combat rising inflationary pressure, and banks felt the brunt of its decision.
The Shanghai Composite Index lost 0.82 percent to end at 2,139.61 points.
China will maintain a prudent monetary stance and balance between adjusting its economic structure, undertaking reform and curbing risks, the People’s Bank of China said in its third-quarter currency policy committee report.
The PBOC warned inflation is likely to gain in the fourth quarter on rising labor and service costs and costlier rents.
The PBOC also said the economy may experience de-leveraging and capacity reduction over a long period and there are also problems in the real estate sector and local government debts.
Premier Li Keqiang said pumping more money will lead to inflation as there is sufficient liquidity in the economy.
“The PBOC report indicated deep concerns of the central bank over economic growth and inflation outlook and signaled a tighter stance on monetary policy,” Xu Gao, analyst with Everbright Securities, said in a report yesterday.
Shanghai Pudong Development Bank lost 1.7 percent to 10.03 yuan (US$1.65). The Industrial Bank dropped 2.6 percent to 11.19 yuan. China Minsheng Banking Corp shed 1.9 percent to 8.90 yuan.
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