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Shares drop after US plans to trim QE3
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SHANGHAI stocks yesterday dipped for eight days in a row after the US Federal Reserve said it would scale back its unprecedented bond-buying program.
The Shanghai Composite Index fell 0.95 percent, or 20.49 points, to 2,127.79.
Fed Chairman Ben Bernanke on Wednesday unveiled the plan to taper the third round of quantitative easing, known as QE3, starting in January by cutting its monthly bond buying to US$75 billion from US$85 billion.
The Fed launched the massive bond-buying program in September 2012.
“The A-share market is facing downward pressure as the tapering of QE3, an external support for the market, came much earlier than expected,” Ma Jinliang, analyst with Sealand Securities, said in a note yesterday.
Ping An Securities said withdrawing the stimulus will lead to a dramatic decline in foreign capital inflow and weigh on China’s stock market.
The seven-day Shanghai Interbank Offered Rate, a gauge of funding costs, rose for the fifth day yesterday, adding 57 basis points to 6.5 percent, the highest since June 20, the National Interbank Funding Center said.
China Petroleum and Chemical Corp lost 1.3 percent to 4.61 yuan. China Oilfield Services Ltd fell 1.5 percent to 22.43 yuan.
Poly Real Estate, China’s second-biggest developer, shed 2.2 percent to settle at 8.40 yuan. Gemdale Corp lost 2.9 percent to close at 6.13 yuan.
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