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Shanghai index drops most in 5 days on capital concern
By Feng Jianmin |
July 19, 2011, Tuesday
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Online Edition
Online Edition
SHANGHAI'S key stock index fell the most in five days, led by banks, on concerns that they will start large-scale fund-raising activities due to insufficiency of funds.
The benchmark Shanghai Composite Index lost 0.7 percent to 2,796.98 points. Turnover fell to 110.7 billion yuan (US$17.1 billion) from yesterday's 130.2 billion yuan.
Banks led the decliners. China Merchants Bank fell 1.4 percent to 12.80 yuan after it announced a plan to raise as much as 35 billion yuan in a rights offer to shareholders in China and Hong Kong.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," said China International Capital Corp in a report. "The fund-raising will lift the ratio by 2 percentage points. It should be able to sustain the bank's development for another two or three years, but the actual length will depend on bank's performance and regulatory issues."
Analysts worry that the fund-raising activities of banks to hedge capital insufficiency under tight monetary policies will pare the amount of funds available for other industries.
Gold miners extended previous gains after gold bullion price hit a 31-year high of US$1,602.40 in New York yesterday. Zijin Mining Co rose 1 percent to 5.83 yuan.
The benchmark Shanghai Composite Index lost 0.7 percent to 2,796.98 points. Turnover fell to 110.7 billion yuan (US$17.1 billion) from yesterday's 130.2 billion yuan.
Banks led the decliners. China Merchants Bank fell 1.4 percent to 12.80 yuan after it announced a plan to raise as much as 35 billion yuan in a rights offer to shareholders in China and Hong Kong.
"The capital adequacy ratio for China Merchants Bank fell to 7.66 percent by the end of the first quarter," said China International Capital Corp in a report. "The fund-raising will lift the ratio by 2 percentage points. It should be able to sustain the bank's development for another two or three years, but the actual length will depend on bank's performance and regulatory issues."
Analysts worry that the fund-raising activities of banks to hedge capital insufficiency under tight monetary policies will pare the amount of funds available for other industries.
Gold miners extended previous gains after gold bullion price hit a 31-year high of US$1,602.40 in New York yesterday. Zijin Mining Co rose 1 percent to 5.83 yuan.
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