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Shanghai shares fall on inflation warning
By Ye Zhen |
February 7, 2013, Thursday
|
Online Edition
Online Edition
SHANGHAI stocks retreated today, bucking a eight-day winning streak, after the central bank warned that inflation pressure may increase as the nation's economy recovers.
The key Shanghai Composite Index declined 0.66 percent to close at 2,418.53 points. Daily turnover was 109.3 billion yuan (US$17.3 billion).
Prices of labor-sensitive products such as services and agricultural goods may climb due to tight labor supply. A rebound in economy and demand may quickly translate into higher consumer prices, People's Bank of China, the central bank, said in its fourth-quarter monetary policy report.
The central bank also warned of potential imported inflation as ultra-loose monetary policies in foreign countries may last longer.
A survey by the central bank showed that 41.7 percent of Chinese consumers expect prices to rise in the next quarter, up 4.7 percentage points from the previous quarter, according to the report.
"There is a concern that a rebound in inflation will post risks to economic recovery," Essence Securities said today. "The report indicates the central bank is more sensitive to inflation and may strengthen measures to check price movements."
Profit taking also weighed on the market. "Many big investors are cashing in profits ahead of the weeklong Spring Festival holiday," Damo Investment Co said today. "But we remain optimistic about the market's long-term outlook as there is sufficient liquidity."
China Minsheng Banking Corp led the decline of lenders, slumping 6 percent to 11 yuan, after surging nearly 90 percent since December 4. ICBC, the nation's largest bank, dropped 2 percent to 4.33 yuan. Shanghai Pudong Development Bank slid 4.8 percent to 11.43 yuan.
The key Shanghai Composite Index declined 0.66 percent to close at 2,418.53 points. Daily turnover was 109.3 billion yuan (US$17.3 billion).
Prices of labor-sensitive products such as services and agricultural goods may climb due to tight labor supply. A rebound in economy and demand may quickly translate into higher consumer prices, People's Bank of China, the central bank, said in its fourth-quarter monetary policy report.
The central bank also warned of potential imported inflation as ultra-loose monetary policies in foreign countries may last longer.
A survey by the central bank showed that 41.7 percent of Chinese consumers expect prices to rise in the next quarter, up 4.7 percentage points from the previous quarter, according to the report.
"There is a concern that a rebound in inflation will post risks to economic recovery," Essence Securities said today. "The report indicates the central bank is more sensitive to inflation and may strengthen measures to check price movements."
Profit taking also weighed on the market. "Many big investors are cashing in profits ahead of the weeklong Spring Festival holiday," Damo Investment Co said today. "But we remain optimistic about the market's long-term outlook as there is sufficient liquidity."
China Minsheng Banking Corp led the decline of lenders, slumping 6 percent to 11 yuan, after surging nearly 90 percent since December 4. ICBC, the nation's largest bank, dropped 2 percent to 4.33 yuan. Shanghai Pudong Development Bank slid 4.8 percent to 11.43 yuan.
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