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Sluggish market drops again as growth slows
By Feng Jianmin |
September 30, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S stock market yesterday extended Wednesday's decline as liquidity continued to tighten. Tumbling metal prices caused losses among commodity producers.
The Shanghai Composite Index lost 1.1 percent, closing at 2,365.34 points, its lowest since July last year.
The index has sunk 14 percent this quarter and is heading for the biggest quarterly loss since the three months to June last year. It has tumbled 16 percent this year, as higher interest rates and constrained bank lending slow private sector growth.
The seven-day repurchase rate - the interest banks charge each other for borrowing and a gauge of liquidity in the financial system - yesterday rose marginally to 5.0675 percent, the highest since August 23.
"We think money supply and lending will continue to fall as economic growth slows down," said Wen Yugao, an analyst at Chinadragon Securities. "The market is likely to remain weak ahead of China's national holiday as institutional investors seem to have reached a wait-and-see consensus based on overseas market uncertainty."
A UBS report released yesterday suggested a global recession is unlikely next year but growth rates will be "very moderate."
"Markets have reacted badly to political and economic discord," the report said. "We advise clients to stay cautious and reduce portfolio risk connected to the European crisis."
Copper prices in London fell 4.5 percent on Wednesday on concerns over the worsening European debt crisis. Gold prices in New York were 2.1 percent lower.
Jiangxi Copper, China's biggest producer of the metal, slid 2.7 percent to 26.46 yuan. Shandong Gold Mining dropped 4.4 percent to 38.09 yuan.
The Shanghai Composite Index lost 1.1 percent, closing at 2,365.34 points, its lowest since July last year.
The index has sunk 14 percent this quarter and is heading for the biggest quarterly loss since the three months to June last year. It has tumbled 16 percent this year, as higher interest rates and constrained bank lending slow private sector growth.
The seven-day repurchase rate - the interest banks charge each other for borrowing and a gauge of liquidity in the financial system - yesterday rose marginally to 5.0675 percent, the highest since August 23.
"We think money supply and lending will continue to fall as economic growth slows down," said Wen Yugao, an analyst at Chinadragon Securities. "The market is likely to remain weak ahead of China's national holiday as institutional investors seem to have reached a wait-and-see consensus based on overseas market uncertainty."
A UBS report released yesterday suggested a global recession is unlikely next year but growth rates will be "very moderate."
"Markets have reacted badly to political and economic discord," the report said. "We advise clients to stay cautious and reduce portfolio risk connected to the European crisis."
Copper prices in London fell 4.5 percent on Wednesday on concerns over the worsening European debt crisis. Gold prices in New York were 2.1 percent lower.
Jiangxi Copper, China's biggest producer of the metal, slid 2.7 percent to 26.46 yuan. Shandong Gold Mining dropped 4.4 percent to 38.09 yuan.
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