Shanghai shares dip as US market sags
By Lydia Chen |
July 29, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S benchmark stock index yesterday fell for the first time in three days with blue chips losing ground after the US market plunged on Wednesday as the country edged closer to defaulting on its debt.
The Shanghai Composite Index lost 0.5 percent to 2,708.78, snapping a two-day, 1.3 percent gain.
Investors are increasingly concerned about the impact of the US debt ceiling crisis, China's slowing economy and the massive debts of local governments, said Zhang Min, an analyst with Galaxy Securities Co.
Stalled talks on the US debt ceiling cast a shadow over the prospects of China, which holds most of its overseas assets in US dollars. The Dow Jones Industrial Average fell 1.6 percent on Wednesday, its biggest one-day drop since early June. It has fallen four straight days. The Nasdaq fell 2.6 percent, its worst day in five months.
Zhang also said: "Chinese lenders will be greatly affected in the next three years since many of the loans to local governments are due from this year until 2013.
"The possibility of bad loans could severely hobble the banking sector as well as the broader economy," Zhang added. "Lenders will have to turn to the capital markets to raise large sums of money if they want to solve their problems."
The Industrial and Commercial Bank of China, the country's biggest lender, fell 1.9 percent to a five-month low of 4.20 yuan.
China on Wednesday ordered banks not to roll over or renew loans to local governments' financing vehicles and to increase oversight of credit to the red-hot real estate sector, Liu Mingkang, chairman of the China Banking Regulatory Commission, told a meeting.
The Shanghai Composite Index lost 0.5 percent to 2,708.78, snapping a two-day, 1.3 percent gain.
Investors are increasingly concerned about the impact of the US debt ceiling crisis, China's slowing economy and the massive debts of local governments, said Zhang Min, an analyst with Galaxy Securities Co.
Stalled talks on the US debt ceiling cast a shadow over the prospects of China, which holds most of its overseas assets in US dollars. The Dow Jones Industrial Average fell 1.6 percent on Wednesday, its biggest one-day drop since early June. It has fallen four straight days. The Nasdaq fell 2.6 percent, its worst day in five months.
Zhang also said: "Chinese lenders will be greatly affected in the next three years since many of the loans to local governments are due from this year until 2013.
"The possibility of bad loans could severely hobble the banking sector as well as the broader economy," Zhang added. "Lenders will have to turn to the capital markets to raise large sums of money if they want to solve their problems."
The Industrial and Commercial Bank of China, the country's biggest lender, fell 1.9 percent to a five-month low of 4.20 yuan.
China on Wednesday ordered banks not to roll over or renew loans to local governments' financing vehicles and to increase oversight of credit to the red-hot real estate sector, Liu Mingkang, chairman of the China Banking Regulatory Commission, told a meeting.
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