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Shanghai stocks drops amid tighter liquidity
By Lydia Chen and Feng Jianmin |
May 25, 2011, Wednesday
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Online Edition
Online Edition
SHANGHAI stock market fell for a fifth day today as investors turned cautious in a market with thin trading following previous hefty losses.
The Shanghai Composite Index lost 0.91 percent to 2,741.74. Turnover shrank to 87 billion yuan (US$13.4 billion).
Liquidity continues to be tight as seven-day repurchase rate, an indication of borrowing cost among banks, jumped to a three-month high of 5.305 percent today.
Liu Jie, analyst with Guotai Junan Securities, attributes the tight liquidity to a 25 percent drop in the inflow of foreign in April, the large banks' duty to pay taxes by the end of May, and offerings of dividends.
Heavyweights such as banks, developers, electricity and steel producers weighed on a market that has already been weak for a weekLenders and developers dragged the market down on a report by Shanghai Securities News that the country may take a even tougher stance to bring down home prices.
Industrial & Commercial Bank of China, the world's biggest bank, shed 1.8 percent to 4.36 yuan. China Vanke, the country's largest developer, was down 2 percent to 7.87 yuan.
Goldman Sachs yesterday downgraded expectation of China's economy growth this year to 9.4 percent from previous 10 percent while that for 2012 was also down to 9.2 percent from 9.5 percent.
The world's leading investment bank expected China's inflation will rise to 5.6 percent in June, the highest level since July, 2008.
It also said in its report that it can not rule out the possibility that the mainland's A-share market may face a 5 to 10 percent downward correction in a short term.
The Shanghai Composite Index lost 0.91 percent to 2,741.74. Turnover shrank to 87 billion yuan (US$13.4 billion).
Liquidity continues to be tight as seven-day repurchase rate, an indication of borrowing cost among banks, jumped to a three-month high of 5.305 percent today.
Liu Jie, analyst with Guotai Junan Securities, attributes the tight liquidity to a 25 percent drop in the inflow of foreign in April, the large banks' duty to pay taxes by the end of May, and offerings of dividends.
Heavyweights such as banks, developers, electricity and steel producers weighed on a market that has already been weak for a weekLenders and developers dragged the market down on a report by Shanghai Securities News that the country may take a even tougher stance to bring down home prices.
Industrial & Commercial Bank of China, the world's biggest bank, shed 1.8 percent to 4.36 yuan. China Vanke, the country's largest developer, was down 2 percent to 7.87 yuan.
Goldman Sachs yesterday downgraded expectation of China's economy growth this year to 9.4 percent from previous 10 percent while that for 2012 was also down to 9.2 percent from 9.5 percent.
The world's leading investment bank expected China's inflation will rise to 5.6 percent in June, the highest level since July, 2008.
It also said in its report that it can not rule out the possibility that the mainland's A-share market may face a 5 to 10 percent downward correction in a short term.
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