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Rate hike worries cause market slide
By Feng Jianmin |
December 9, 2010, Thursday
|
Online Edition
Online Edition
SHANGHAI'S key stock index fell to a two-month low as worries for higher interest rates intensified after China's central bank halted selling three-year bills because banks demand higher yields.
Benchmark Shanghai Composite Index lost 1.3 percent, or 37.6 points, to 2,810.9. Turnover was 108.7 billion yuan (US$163 billion), slightly lower than yesterday's 111.8 billion yuan.
The Shenzhen Composite Index, which tracks the smaller domestic market, was down 1.9 percent to 1,280.8.
The central bank said it will sell 5 billion yuan of three-month bills tomorrow but halt bi-weekly auctions of notes due in three years, according to a statement on its website.
Analysts said that the volume of bills offered in recent weeks has been only around 4 percent of annual level, which indicated that the central bank will have to raise interest rates or requirement reserve ratio to control market liquidity.
A rate hike of 0.5 percentage point would meet market expectations, according to an analyst with First Capital Securities.
Banks were low. Industrial Bank of China fell 1 percent to 4.21 yuan. Bank of China was unchanged at 3.27 yuan. China Construction Bank lost 1.7 percent to 4.69 yuan.
Property developers extended previous declines after China Bank Regulatory Commission ordered to investigate risks of trust funds for property developers last night. China Vanke, China's largest property developer, dropped 3.8 percent to 8.17 yuan. Poly Real Estate Co, China's second largest, lost 4.5 percent to 12.13 yuan.
Steelmakers outperformed on news that the government would invest at lease 3 trillion yuan to expand high speed railway networks in the next five years. Baoshan Iron & Steel Co added 0.2 percent to 6.36 yuan. Wuhan Iron & Steel Co rose 0.9 percent to 4.49 yuan.
Benchmark Shanghai Composite Index lost 1.3 percent, or 37.6 points, to 2,810.9. Turnover was 108.7 billion yuan (US$163 billion), slightly lower than yesterday's 111.8 billion yuan.
The Shenzhen Composite Index, which tracks the smaller domestic market, was down 1.9 percent to 1,280.8.
The central bank said it will sell 5 billion yuan of three-month bills tomorrow but halt bi-weekly auctions of notes due in three years, according to a statement on its website.
Analysts said that the volume of bills offered in recent weeks has been only around 4 percent of annual level, which indicated that the central bank will have to raise interest rates or requirement reserve ratio to control market liquidity.
A rate hike of 0.5 percentage point would meet market expectations, according to an analyst with First Capital Securities.
Banks were low. Industrial Bank of China fell 1 percent to 4.21 yuan. Bank of China was unchanged at 3.27 yuan. China Construction Bank lost 1.7 percent to 4.69 yuan.
Property developers extended previous declines after China Bank Regulatory Commission ordered to investigate risks of trust funds for property developers last night. China Vanke, China's largest property developer, dropped 3.8 percent to 8.17 yuan. Poly Real Estate Co, China's second largest, lost 4.5 percent to 12.13 yuan.
Steelmakers outperformed on news that the government would invest at lease 3 trillion yuan to expand high speed railway networks in the next five years. Baoshan Iron & Steel Co added 0.2 percent to 6.36 yuan. Wuhan Iron & Steel Co rose 0.9 percent to 4.49 yuan.
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