Shares decline after rates rise
By Feng Jianmin |
July 8, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S key stock index fell yesterday after the People's Bank of China raised benchmark interest rates by 25 basis points on Wednesday night.
The Shanghai Composite Index lost 0.58 percent to 2,797.27 points. Turnover was relatively high at 141.3 billion yuan (US$21.8 billion).
China on Wednesday raised interest rates for the third time this year as it tries to douse high inflation. The benchmark one-year lending rate rose to 6.56 percent and the one-year deposit rate increased to 3.5 percent, effective yesterday.
China's top statistics bureau said yesterday that major economic data including inflation will be released on the 9th day of each month, two days ahead of the previous schedule, to prevent data leaks. Inflation in June is widely expected to be between 6.2 and 6.4 percent.
"The central bank's decision to raise rates means inflation is still serious and policies will not be significantly loosened until inflation slows," said Dong Le, a senior analyst with Hai Tong Securities.
Dong said the increase will benefit banks as both lending and fixed deposit rates were raised by the same level while the demand deposit rate, a major source of deposits for banks, was not changed.
This may contribute 1 percent more in profits for banks, Dong said.
Banks were mixed. The Industrial and Commercial Bank of China fell 1.1 percent to 4.32 yuan. China Merchants Bank edged up 0.5 percent to 13.24 yuan.
Media firms rallied after a 20 billion yuan investment fund for cultural industries was launched. Hunan TV Broadcast Intermediary Co jumped the daily limit of 10 percent to 29.52 yuan. China Television Media climbed 4.4 percent to 13.11 yuan.
The Shanghai Composite Index lost 0.58 percent to 2,797.27 points. Turnover was relatively high at 141.3 billion yuan (US$21.8 billion).
China on Wednesday raised interest rates for the third time this year as it tries to douse high inflation. The benchmark one-year lending rate rose to 6.56 percent and the one-year deposit rate increased to 3.5 percent, effective yesterday.
China's top statistics bureau said yesterday that major economic data including inflation will be released on the 9th day of each month, two days ahead of the previous schedule, to prevent data leaks. Inflation in June is widely expected to be between 6.2 and 6.4 percent.
"The central bank's decision to raise rates means inflation is still serious and policies will not be significantly loosened until inflation slows," said Dong Le, a senior analyst with Hai Tong Securities.
Dong said the increase will benefit banks as both lending and fixed deposit rates were raised by the same level while the demand deposit rate, a major source of deposits for banks, was not changed.
This may contribute 1 percent more in profits for banks, Dong said.
Banks were mixed. The Industrial and Commercial Bank of China fell 1.1 percent to 4.32 yuan. China Merchants Bank edged up 0.5 percent to 13.24 yuan.
Media firms rallied after a 20 billion yuan investment fund for cultural industries was launched. Hunan TV Broadcast Intermediary Co jumped the daily limit of 10 percent to 29.52 yuan. China Television Media climbed 4.4 percent to 13.11 yuan.
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