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Shanghai index drops after interest rate rise
By Lydia Chen |
February 9, 2011, Wednesday
|
Online Edition
Online Edition
SHARES in Shanghai slumped on the first trading day following a week-long break as heavyweights in mining and oil industries fell while investors dumped financials and developers after a surprise interest rate rise yesterday.
The Shanghai Composite Index lost 0.89 percent to 2,774.07. Turnover climbed to 104.84 billion yuan (US$15.93 billion) from 90 billion yuan of February 1, the last trading day before the Spring Festival holiday.
The mining industry led the market down as prices of commodities in world markets fell over concerns that higher borrowing costs will lead to a weaker demand for coals and metals.
Yanzhou Coal Mining Co tumbled 4.82 percent while Yunnan Copper sank 5.28 percent.
Copper fell from an all-time-high record in New York soon after China announced the interest rate hike. In December, imports into China declined 2 percent from a month earlier, customs data showed.
However, analysts said there would be at least two more interest rate rises this year.
"The one-year deposit rate is still far lower than the current inflation rate, which means there is still plenty room left" for rate hikes, said Gui Haoming, chief analyst with Shenyin & Wanguo Securities Co.
Consumer prices growth in January is expected to reach a record since 2008 to 5.5 percent while the figure may climb even higher in February due to the Spring Festival holiday, China International Capital Corp said in a note today.
The Shanghai Composite Index lost 0.89 percent to 2,774.07. Turnover climbed to 104.84 billion yuan (US$15.93 billion) from 90 billion yuan of February 1, the last trading day before the Spring Festival holiday.
The mining industry led the market down as prices of commodities in world markets fell over concerns that higher borrowing costs will lead to a weaker demand for coals and metals.
Yanzhou Coal Mining Co tumbled 4.82 percent while Yunnan Copper sank 5.28 percent.
Copper fell from an all-time-high record in New York soon after China announced the interest rate hike. In December, imports into China declined 2 percent from a month earlier, customs data showed.
However, analysts said there would be at least two more interest rate rises this year.
"The one-year deposit rate is still far lower than the current inflation rate, which means there is still plenty room left" for rate hikes, said Gui Haoming, chief analyst with Shenyin & Wanguo Securities Co.
Consumer prices growth in January is expected to reach a record since 2008 to 5.5 percent while the figure may climb even higher in February due to the Spring Festival holiday, China International Capital Corp said in a note today.
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