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Rate worries pull index down
By Feng Jianmin |
December 10, 2010, Friday
|
Print Edition
Print Edition
SHANGHAI'S key stock index fell to a two-month low over increased worries of higher interest rates after China's central bank halted selling three-year bills as banks demand higher yields.
The Shanghai Composite Index lost 1.3 percent, or 37.6 points, to end at 2,810.95, the lowest since October 11. Turnover was 108.7 billion yuan (US$ 16.3 billion), slightly lower than 111.8 billion yuan on Wednesday.
The People's Bank of China, the central bank, said it sold 5 billion yuan of three-month bills yesterday but halted bi-weekly auctions of notes due in three years, according to a statement on its website.
Market watchers said the volume of bills offered in the recent two weeks has been only about 4 percent of this year's weekly average, which indicated the central bank will have to raise interest rates or requirement reserve ratio to control market liquidity.
The market expects a rise of 0.5 percentage point in the reserve ratio, said an analyst at First Capital Securities.
Banks lost. Industrial and Commercial Bank of China lost 1 percent to 4.21 yuan. China Construction Bank fell 1.7 percent to 4.69 yuan.
Property developers extended previous declines after the China Banking Regulatory Commission yesterday ordered a probe into trust funds of property developers. Poly Real Estate Co, China's second-largest listed property developer, lost 4.5 percent to 12.13 yuan.
Rail stocks gained on news the government would invest at lease 3 trillion yuan to expand a network of high-speed railway in the next five years. China CNR Corp rose 5.2 percent to 7.09 yuan. CSR Corp jumped 7.3 percent to 8.25 yuan. China Railway Group gained 5.9 percent to close at 4.65 yuan.
The Shanghai Composite Index lost 1.3 percent, or 37.6 points, to end at 2,810.95, the lowest since October 11. Turnover was 108.7 billion yuan (US$ 16.3 billion), slightly lower than 111.8 billion yuan on Wednesday.
The People's Bank of China, the central bank, said it sold 5 billion yuan of three-month bills yesterday but halted bi-weekly auctions of notes due in three years, according to a statement on its website.
Market watchers said the volume of bills offered in the recent two weeks has been only about 4 percent of this year's weekly average, which indicated the central bank will have to raise interest rates or requirement reserve ratio to control market liquidity.
The market expects a rise of 0.5 percentage point in the reserve ratio, said an analyst at First Capital Securities.
Banks lost. Industrial and Commercial Bank of China lost 1 percent to 4.21 yuan. China Construction Bank fell 1.7 percent to 4.69 yuan.
Property developers extended previous declines after the China Banking Regulatory Commission yesterday ordered a probe into trust funds of property developers. Poly Real Estate Co, China's second-largest listed property developer, lost 4.5 percent to 12.13 yuan.
Rail stocks gained on news the government would invest at lease 3 trillion yuan to expand a network of high-speed railway in the next five years. China CNR Corp rose 5.2 percent to 7.09 yuan. CSR Corp jumped 7.3 percent to 8.25 yuan. China Railway Group gained 5.9 percent to close at 4.65 yuan.
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