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Shanghai index up 1% on central bank interest rates cut
By Ye Zhen |
July 6, 2012, Friday
|
Online Edition
Online Edition
SHANGHAI shares advanced today after China's central bank lowered the benchmark interest rates late yesterday to shore up economic growth.
The key Shanghai Composite Index gained 1.01 percent, or 22.23 points, to close at 2,223.58 points. Turnover was 70.8 billion yuan (US$11.2 billion).
The People's Bank of China last night cut the benchmark interest rates for the second time in one month, with the one-year deposit rate reduced by 25 basis points to 3 percent and the one-year lending interest rate lowered 31 basis points to 6 percent, effective today.
The central bank also allowed banks to cut lending rates to 70 percent of the benchmark rate, compared with 80 percent before.
"The central bank's second cut was very timely. It will effectively reduce companies' financial burdens and help stabilize the economy, the real estate industry and the stock market," Li Daxiao, director of the Yingda Securities Research Institute, tweeted on Weibo shortly after hearing the news.
Property developers led the market gains. China Vanke, the nation's biggest developer, jumped 3.9 percent to 9.65 yuan. Poly Real Estate, the second largest developer, soared 5 percent to 12.82 yuan. Gemdale Corporation surged 5.3 percent to 6.91 yuan.
Brokerages also gained. Citic Securities, the biggest listed brokerage, rose 3.2 percent to close at 12.57 yuan. Founder Securities Co climbed 3.3 percent to 4.95 yuan. Haitong Securities Co added 2.9 percent to 9.38 yuan.
Lenders posted a weak run on speculations the asymmetrical interest-rate cut will increase their cost to absorb deposits and reduce their lending income.
The Industrial and Commercial Bank of China Ltd, the nation's largest lender, lost 1 percent to 3.91 yuan. China Construction Bank fell 0.7 percent to 4.16 yuan. Agricultural Bank of China retreated 0.8 percent to 2.55 yuan.
The key Shanghai Composite Index gained 1.01 percent, or 22.23 points, to close at 2,223.58 points. Turnover was 70.8 billion yuan (US$11.2 billion).
The People's Bank of China last night cut the benchmark interest rates for the second time in one month, with the one-year deposit rate reduced by 25 basis points to 3 percent and the one-year lending interest rate lowered 31 basis points to 6 percent, effective today.
The central bank also allowed banks to cut lending rates to 70 percent of the benchmark rate, compared with 80 percent before.
"The central bank's second cut was very timely. It will effectively reduce companies' financial burdens and help stabilize the economy, the real estate industry and the stock market," Li Daxiao, director of the Yingda Securities Research Institute, tweeted on Weibo shortly after hearing the news.
Property developers led the market gains. China Vanke, the nation's biggest developer, jumped 3.9 percent to 9.65 yuan. Poly Real Estate, the second largest developer, soared 5 percent to 12.82 yuan. Gemdale Corporation surged 5.3 percent to 6.91 yuan.
Brokerages also gained. Citic Securities, the biggest listed brokerage, rose 3.2 percent to close at 12.57 yuan. Founder Securities Co climbed 3.3 percent to 4.95 yuan. Haitong Securities Co added 2.9 percent to 9.38 yuan.
Lenders posted a weak run on speculations the asymmetrical interest-rate cut will increase their cost to absorb deposits and reduce their lending income.
The Industrial and Commercial Bank of China Ltd, the nation's largest lender, lost 1 percent to 3.91 yuan. China Construction Bank fell 0.7 percent to 4.16 yuan. Agricultural Bank of China retreated 0.8 percent to 2.55 yuan.
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