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Shanghai shares slide as liquidity fear persists
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Shanghai stocks retreated today as coal and cement producers dragged the market down amid fears that the recent liquidity crunch may hurt the economy.
The benchmark Shanghai Composite Index fell 1.58 percent, or 33.25 points, to 2,073.10. Turnover was 66.8 billion yuan (US$11 billion) at the trading close.
“Soaring money rates have become a major risk for economic growth,” Jiang Chao, analyst with Haitong Securities, said in a note today.
The broker expects China’s industrial output to grow 9.8 percent year-on-year in December, slowing from a 10 percent increase in November. While the growth of fixed-asset investment is estimated to moderate from 19.9 percent in the first 11 months to 19.6 percent for the whole year, according to Haitong.
The People’s Bank of China today refrained from injecting more liquidity, disappointing the market still thirsty for more cash from the central bank.
“The central bank is signaling a tight monetary stance as the government aims to cut overcapacity and de-leverage the economy,” said Sealand Securities.
Cyclical shares, a barometer of economic activities, declined the most. Anhui Conch Cement Co, China’s biggest cement producer, slipped 1.5 percent to 16.93 yuan. Gansu Qilianshan Cement Group Co Ltd lost 3.7 percent to 6.57 yuan.
China Shenhua Energy Co, the nation's biggest coal producer, fell 1.6 percent to 15.57 yuan. Shanxi Lu'an Environmental Energy Development Co Ltd slumped 4.9 percent to 10.22 yuan.
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