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Shanghai Composite drops 0.96% in morning trading
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Shanghai stocks declined this morning as shares related to the Shanghai Free Trade Zone lost and technology shares plunged.
The key Shanghai Composite Index dropped 0.96 percent, or 20.82 points, to 2,143.50. Turnover was 56.3 billion yuan (US$9.2 billion) by midday.
“There is concern about the sustainability of economic recovery as data showed the recent rebound was mainly driven by infrastructure investment as a result of policy stimulus,” Tu Jun, an analyst with Shanghai Securities, said in a report.
“Worry about policy tightening also grew as the central bank refrained from injecting liquidity,” Tu said.
Data from the National Interbank Funding Center showed, the seven-day repurchase rate, a gauge of funding availability, rose 140 basis points this week to 4.89 percent as of 11:30am in Shanghai, the biggest weekly advance since June, as the central bank suspended twice-weekly auctions of reverse repo agreements to drain cash from the financial system.
The central bank successfully drained 58 billion yuan this week, after withdrawing 44.5 billion yuan last week.
FTZ-related stocks fell. Shanghai Waigaoqiao Free Trade Zone Development Co, which operates two of the four bonded areas in the free trade zone, tumbled by the daily limit of 10 percent to 41.58 yuan. BesTV New Media Co, which has a joint venture with Microsoft in the zone, plunged 6.8 percent to 36.99 yuan.
Technology shares were among the biggest losers this morning as investors feared they may have been overvalued. Dr Peng Telecom & Media Group Co fell 8.8 percent to 16.88 yuan. Beijing Zhongchuang Telecom Test Co lost 7 percent to 21.30 yuan.
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