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Shanghai stocks touch lowest level since 2009
By Ye Zhen |
September 27, 2012, Thursday
|
Print Edition
Print Edition
SHANGHAI stocks tumbled to their lowest level in nearly 44 months yesterday amid concerns that China may hold off on additional easing measures after the central bank said it would maintain a prudent monetary policy.
The market also fell on the reboot of an audit on initial public offering applications after a two-month suspension as well as lingering risk aversion ahead of the upcoming Mid-Autumn Festival and National Day holidays.
The key Shanghai Composite Index fell 1.24 percent to 2,004.17 points. The index earlier fell to as low as 1,999.48, below 2,000 for the first time since February 2009. Turnover was 38.4 billion yuan (US$6.1 billion) at the close of trading.
The benchmark index has lost 8.9 percent this year on concern that the nation's economic slowdown, which has lasted six quarters, will deepen without sufficient policy support.
On Monday, the People's Bank of China restated that it would continue to implement a prudent monetary policy and make it more targeted, flexible and forward-looking, while fine-tuning it according to the economic situation.
Analysts said this indicated the bank would not use blunter monetary instruments in the short term due to elevated price pressure.
Inflationary pressure has been constraining China's monetary easing, especially after the world's major central banks, as in the US and Japan, unveiled easier monetary policies, said Yi Xianrong, a finance researcher at the Chinese Academy of Social Sciences.
China's consumer price index rose 2 percent from a year earlier in August, accelerating from a 1.8 percent growth in July.
The central bank injected a record 290 billion yuan into the domestic financial market via reverse repurchase agreements on Monday as it is relying more on open market operation to adjust market liquidity.
"Investors were upset that the central bank's cautious stance failed their expectation that China would join the world's major central banks in easing monetary policy," said Yi Wenbin, an analyst at Huatai Securities.
Market sentiment was further hurt as China Securities Regulatory Commission, the nation's top securities regulator, said on its website that it would be resuming its IPO auditing process for two companies after a suspension of two months.
"The launch of more IPOs will add to the already tight market liquidity and further damp market confidence," independent analyst Hong Yanhua said.
The market also retreated on risk aversion ahead of the upcoming holidays.
"Investors are stepping back to avoid risks from the peripheral markets during the holiday as well as risks after the holiday when a batch of economic indicators for September and the third quarter will be released," said Zhang Jiuhui, an analyst at Greatwall Securities.
Property developers lost after the Guangzhou government said it would limit the pre-sale of some high-end housing projects. China Vanke, the nation's biggest developer, fell 1.5 percent to 7.79 yuan. Poly Real Estate, second largest, fell 1.4 percent to 10.03 yuan.
The market also fell on the reboot of an audit on initial public offering applications after a two-month suspension as well as lingering risk aversion ahead of the upcoming Mid-Autumn Festival and National Day holidays.
The key Shanghai Composite Index fell 1.24 percent to 2,004.17 points. The index earlier fell to as low as 1,999.48, below 2,000 for the first time since February 2009. Turnover was 38.4 billion yuan (US$6.1 billion) at the close of trading.
The benchmark index has lost 8.9 percent this year on concern that the nation's economic slowdown, which has lasted six quarters, will deepen without sufficient policy support.
On Monday, the People's Bank of China restated that it would continue to implement a prudent monetary policy and make it more targeted, flexible and forward-looking, while fine-tuning it according to the economic situation.
Analysts said this indicated the bank would not use blunter monetary instruments in the short term due to elevated price pressure.
Inflationary pressure has been constraining China's monetary easing, especially after the world's major central banks, as in the US and Japan, unveiled easier monetary policies, said Yi Xianrong, a finance researcher at the Chinese Academy of Social Sciences.
China's consumer price index rose 2 percent from a year earlier in August, accelerating from a 1.8 percent growth in July.
The central bank injected a record 290 billion yuan into the domestic financial market via reverse repurchase agreements on Monday as it is relying more on open market operation to adjust market liquidity.
"Investors were upset that the central bank's cautious stance failed their expectation that China would join the world's major central banks in easing monetary policy," said Yi Wenbin, an analyst at Huatai Securities.
Market sentiment was further hurt as China Securities Regulatory Commission, the nation's top securities regulator, said on its website that it would be resuming its IPO auditing process for two companies after a suspension of two months.
"The launch of more IPOs will add to the already tight market liquidity and further damp market confidence," independent analyst Hong Yanhua said.
The market also retreated on risk aversion ahead of the upcoming holidays.
"Investors are stepping back to avoid risks from the peripheral markets during the holiday as well as risks after the holiday when a batch of economic indicators for September and the third quarter will be released," said Zhang Jiuhui, an analyst at Greatwall Securities.
Property developers lost after the Guangzhou government said it would limit the pre-sale of some high-end housing projects. China Vanke, the nation's biggest developer, fell 1.5 percent to 7.79 yuan. Poly Real Estate, second largest, fell 1.4 percent to 10.03 yuan.
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