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Shanghai stocks fall on signs of policy tightening
By Hu Xiaocen |
February 19, 2013, Tuesday
|
Online Edition
Online Edition
SHANGHAI stocks slumped this morning, the second trading day after the weeklong Spring Festival amid signs of tighter monetary policy and stricter control of the real estate market.
The Shanghai Composite Index fell 1.02 percent to 2,396 points in the morning session. The fall was led by property developers and building materials producers. The turnover was 62 billion yuan (US$955 million) by midday.
"The People's Bank of China drained liquidity from the interbank market for the first time in eight months, which sent a hawkish signal that the central bank does not want the money market conditions to get too easy," Dariusz Kowalczyk, senior economist at Credit Agricole in Hong Kong, said in a research note today.
"Not surprisingly, Shanghai stocks fell… Tighter liquidity will also limit gains in the equity market," Kowalczyk said, referring to the sharp fall of Chinese equities.
Property developers and building materials suppliers tumbled after media reports that cities including Kunshan, Dongguan and Jinhua have cut this year's housing provident fund quota, meaning a reduced amount of loans for home buyers in those cities. Investors are wary of more policy tightening as the new government tries to curb inflation and the real estate bubble.
China Vanke Co, the nation's biggest developer, fell 3.4 percent to 11.30 yuan. Poly Real Estate Group Co, the second-biggest, sank 4.5 percent to 12.29 yuan. Shanghai Lujiazui Finance & Trade Zone Development Co lost 3.6 percent to 12.04 yuan. Anhui Conch Cement Co, China's biggest producer of the building material, slumped 5.8 percent to 20.1 yuan.
The Shanghai Composite Index fell 1.02 percent to 2,396 points in the morning session. The fall was led by property developers and building materials producers. The turnover was 62 billion yuan (US$955 million) by midday.
"The People's Bank of China drained liquidity from the interbank market for the first time in eight months, which sent a hawkish signal that the central bank does not want the money market conditions to get too easy," Dariusz Kowalczyk, senior economist at Credit Agricole in Hong Kong, said in a research note today.
"Not surprisingly, Shanghai stocks fell… Tighter liquidity will also limit gains in the equity market," Kowalczyk said, referring to the sharp fall of Chinese equities.
Property developers and building materials suppliers tumbled after media reports that cities including Kunshan, Dongguan and Jinhua have cut this year's housing provident fund quota, meaning a reduced amount of loans for home buyers in those cities. Investors are wary of more policy tightening as the new government tries to curb inflation and the real estate bubble.
China Vanke Co, the nation's biggest developer, fell 3.4 percent to 11.30 yuan. Poly Real Estate Group Co, the second-biggest, sank 4.5 percent to 12.29 yuan. Shanghai Lujiazui Finance & Trade Zone Development Co lost 3.6 percent to 12.04 yuan. Anhui Conch Cement Co, China's biggest producer of the building material, slumped 5.8 percent to 20.1 yuan.
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