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Shanghai index posts biggest loss in 2 months
By Pan Xiaoyi |
January 17, 2011, Monday
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Online Edition
Online Edition
SHANGHAI'S key stock index plunged more than 3 percent today, the biggest daily loss in two months, after the central government further tightened policies by further raising the reserve requirement ratio.
The benchmark Shanghai Composite Index tumbled 3.03 percent to 2,706.66 points. Turnover stood at 104.8 billion yuan (US$16 billion). Losers outnumbered gainers 795 by 61 while 2 remained unchanged.
The Shenzhen Composite Index, which tracks the smaller mainland market, slumped 4.25 percent to 1,180.39 points.
Market analysts said investors may remain cautious before major economic data are released on Thursday. In particular, the inflation level will be vital to fine-tune the macro-policy in the first quarter, analysts said.
The People's Bank of China raised the reserve requirement ratio on banks by 0.5 percentage points from Thursday, the fourth rise in more than two months to rein in inflationary risks.
China's biggest banks will face a record high of a 19.5 percent requirement and the move is expected to freeze nearly 400 billon yuan in the market.
The announcement was made on late Friday when the market is closed.
"Investors seem more negative towards the market liquidity as the central bank sticks firmly to reining in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "And continuous pressure from inflation in the first quarter keeps pounding the market."
Property shares led the decliners as real estate developers suffered the most from tightened cash flows. Shanghai Shimao Co dived by 10 percent daily cap to 13.68 yuan. Poly Real Estate Group, the country's second largest property developer, retreated 8.7 percent to 13.6 yuan. Gemdale Corp withdrew 8.2 percent to 6.73 yuan.
The benchmark Shanghai Composite Index tumbled 3.03 percent to 2,706.66 points. Turnover stood at 104.8 billion yuan (US$16 billion). Losers outnumbered gainers 795 by 61 while 2 remained unchanged.
The Shenzhen Composite Index, which tracks the smaller mainland market, slumped 4.25 percent to 1,180.39 points.
Market analysts said investors may remain cautious before major economic data are released on Thursday. In particular, the inflation level will be vital to fine-tune the macro-policy in the first quarter, analysts said.
The People's Bank of China raised the reserve requirement ratio on banks by 0.5 percentage points from Thursday, the fourth rise in more than two months to rein in inflationary risks.
China's biggest banks will face a record high of a 19.5 percent requirement and the move is expected to freeze nearly 400 billon yuan in the market.
The announcement was made on late Friday when the market is closed.
"Investors seem more negative towards the market liquidity as the central bank sticks firmly to reining in excess money in the market," said Zhao Yang, an analyst with United Securities Co. "And continuous pressure from inflation in the first quarter keeps pounding the market."
Property shares led the decliners as real estate developers suffered the most from tightened cash flows. Shanghai Shimao Co dived by 10 percent daily cap to 13.68 yuan. Poly Real Estate Group, the country's second largest property developer, retreated 8.7 percent to 13.6 yuan. Gemdale Corp withdrew 8.2 percent to 6.73 yuan.
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