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Shanghai market gains in spite of interest hike
By Feng Jianmin |
October 20, 2010, Wednesday
|
Online Edition
Online Edition
SHANGHAI'S key stock index ended higher after the morning session, led by insurers, after the central bank sprung a surprise yesterday evening with its first interest rate rise in three years.
The benchmark Shanghai Composite Index edged up 0.65 percent, or 19.6 points, to close at 3,021.4. Turnover rose to 149.2 billion yuan (US$22.4 billion) from yesterday morning's 107.2 billion yuan.
The People's Bank of China said that it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.
Major global market dropped overnight on assumptions that China's rate boost will damp its economy. The US Dow Jones fell 1.48 percent to below 11,000 points, while the UK FTSE was 0.67 percent lower.
"The act is risky as the economic recovery was slow, but not without advantages," said Zhang Wengang, an analyst with Nanjing Securities Co. "Firstly, it will hedge further inflation, and ease the pressure of high inflation on the Chinese people. Secondly, it will help to create healthier economy by relieving capital from the property market to other industries."
Insurers led the gainers. China Life Insurance Co, the country's largest life insurance company, rose 4.8 percent to 27.94 yuan. China Pacific Insurance Co, advanced 4.34 percent to 28.15 yuan. Ping An Insurance Co, grew 5.2 percent to 65.88 yuan.
Property developers dropped. China Merchants Property Development Co fell 5 percent to 18.91 yuan. China Vanke declined 4.5 percent to 9.07 yuan. Poly Real Estate Co retreated 5 percent to 14.40 yuan.
Banks were mixed. Bank of China was unchanged at 3.62 yuan. China Construction Bank edged up 0.6 percent to 5.32 yuan. Bank of Communications lost 0.9 percent to 6.71 yuan.
The benchmark Shanghai Composite Index edged up 0.65 percent, or 19.6 points, to close at 3,021.4. Turnover rose to 149.2 billion yuan (US$22.4 billion) from yesterday morning's 107.2 billion yuan.
The People's Bank of China said that it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.
Major global market dropped overnight on assumptions that China's rate boost will damp its economy. The US Dow Jones fell 1.48 percent to below 11,000 points, while the UK FTSE was 0.67 percent lower.
"The act is risky as the economic recovery was slow, but not without advantages," said Zhang Wengang, an analyst with Nanjing Securities Co. "Firstly, it will hedge further inflation, and ease the pressure of high inflation on the Chinese people. Secondly, it will help to create healthier economy by relieving capital from the property market to other industries."
Insurers led the gainers. China Life Insurance Co, the country's largest life insurance company, rose 4.8 percent to 27.94 yuan. China Pacific Insurance Co, advanced 4.34 percent to 28.15 yuan. Ping An Insurance Co, grew 5.2 percent to 65.88 yuan.
Property developers dropped. China Merchants Property Development Co fell 5 percent to 18.91 yuan. China Vanke declined 4.5 percent to 9.07 yuan. Poly Real Estate Co retreated 5 percent to 14.40 yuan.
Banks were mixed. Bank of China was unchanged at 3.62 yuan. China Construction Bank edged up 0.6 percent to 5.32 yuan. Bank of Communications lost 0.9 percent to 6.71 yuan.
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