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Shanghai stocks slump on FDI, liquidity concerns
By Hu Xiaocen |
December 19, 2012, Wednesday
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Online Edition
Online Edition
SHANGHAI stocks retreated today after climbing for three days in a row as market sentiment waned over dwindling inbound investment and a liquidity crunch.
The Shanghai Composite Index dipped 0.1 percent to 2,162.24 points today, trimming early gains. The turnover stood at 75.8 billion yuan (US$12 billion), down a quarter from Tuesday's.
Foreign direct investment in China fell 5.4 percent year-on-year in November, extending October's drop of 0.24 percent. Inbound investment during the first 11 months slid 3.6 percent to US$100 billion, according to the Ministry of Commerce.
"China's foreign direct investment has been declining since last November, except for May. Foreign investors remained cautious against the backdrop of recovering economic conditions" Soochow Securities Co said in a report today.
"On the other hand, domestic enterprises have difficulty getting bank loans and equity financing almost stopped amid sluggish stock market. The companies have no choice but seek debt financing and shadow banking. So the real economy has poor liquidity compared with the banking sector," said the brokerage firmed based in Suzhou.
Most financials declined. ICBC, the nation's biggest bank, lost 0.5 percent to 4.1 yuan. Agricultural Bank of China dropped 0.7 percent to 2.75 yuan. Citic Securities Co retreated 0.3 percent to 11.8 yuan. China Life Insurance Co, the nation's biggest life insurer, shed 1 percent to 19.36 yuan.
The Shanghai Composite Index dipped 0.1 percent to 2,162.24 points today, trimming early gains. The turnover stood at 75.8 billion yuan (US$12 billion), down a quarter from Tuesday's.
Foreign direct investment in China fell 5.4 percent year-on-year in November, extending October's drop of 0.24 percent. Inbound investment during the first 11 months slid 3.6 percent to US$100 billion, according to the Ministry of Commerce.
"China's foreign direct investment has been declining since last November, except for May. Foreign investors remained cautious against the backdrop of recovering economic conditions" Soochow Securities Co said in a report today.
"On the other hand, domestic enterprises have difficulty getting bank loans and equity financing almost stopped amid sluggish stock market. The companies have no choice but seek debt financing and shadow banking. So the real economy has poor liquidity compared with the banking sector," said the brokerage firmed based in Suzhou.
Most financials declined. ICBC, the nation's biggest bank, lost 0.5 percent to 4.1 yuan. Agricultural Bank of China dropped 0.7 percent to 2.75 yuan. Citic Securities Co retreated 0.3 percent to 11.8 yuan. China Life Insurance Co, the nation's biggest life insurer, shed 1 percent to 19.36 yuan.
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