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Shanghai stocks languish as investors digest Fed move
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Shanghai stocks continued their weak run this morning, with the key index heading for the biggest weekly loss in nearly six months, as commodity shares tumbled over the US Federal Reserve’s decision to taper its bond-buying program.
The benchmark Shanghai Composite Index fell 0.6 percent, or 12.69 points, to 2,115.10. Half-day turnover was 33.6 billion yuan (US$5.5 billion).
Gold companies lost as the gold price fell 3.5 percent to a three-year low following the Fed’s announcement. Shandong Gold Mining Co Ltd dropped 4.3 percent to 17.57 yuan. Zhongjin Gold Corp Ltd slid 3.3 percent to 8.32 yuan. Zijin Mining Group Co Ltd, China’s largest gold miner, shed 1.7 percent to 2.29 yuan.
Oil producers also retreated. China Oilfield Services Ltd declined 3.6 percent to 21.62 yuan. Zhejiang Haiyue Co Ltd lost 0.5 percent to 18.66 yuan.
The People’s Bank of China, the central bank, yesterday injected some liquidity into the country’s financial system through short-term liquidity tools after interbank funding costs soared to the highest since June.
Zhang Zhiwei, chief economist for China at Nomura Holdings Inc, said the central bank’s move is likely to avoid a liquidity squeeze as occurred in June.
“We maintain the view that some defaults will emerge next year in local government financing vehicles, the corporate sector and non-banking financial institutions, such as trust companies,” Zhang added.
Lenders declined. China Minsheng Banking Corp Ltd fell 1.3 percent to 7.78 yuan. Industrial Bank Co Ltd sank 1.3 percent to 9.99 yuan.
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