Stock index hits year-long low
By Lydia Chen |
August 23, 2011, Tuesday
|
Print Edition
Print Edition
SHANGHAI'S key stock index yesterday fell for a fifth day, slumping to its lowest level in more than a year, as investors remained cautious on concerns of further economic intervention by the government.
The Shanghai Composite Index fell 0.7 percent to 2,515.86, the lowest since July 19, 2010, when the index sank to 2,475.42.
China's money-market rate yesterday climbed to its highest level in three weeks in Shanghai, raising concerns that China will raise the interest rate again.
The seven-day repurchase rate, a gauge of funding availability in the financial system, jumped to 4.97 percent during the morning, according to the Shanghai Interbank Offered Rate website. The month's low was 3 percent.
In a note yesterday, investment bank China International Capital Corp said: "Investors are still jittery about China's stance on macro-economy policies, coupled with lingering pessimistic expectations for the US and Europe. The A-share market is likely to continue its violent swing in a short term."
The bank suggested investors take defensive positions in, for example, consumer and pharmaceutical plays.
Cement makers and banks led declines - there were media reports that cement prices in east China slipped unexpectedly last month, while a former vice governor of the People's Bank of China warned that Chinese banks face substantial stresses in the wake of the Basel III accord.
The Industrial and Commercial Bank of China, the country's largest lender, lost 1.2 percent to 4.08 yuan (US$0.64). Anhui Conch Cement, China's biggest cement maker, shed 5 percent to 21.75 yuan.
Wu Xiaoling, a former vice governor of China's central bank, warned that structurally important banks will face a financing gap of 400 billion yuan to 500 billion yuan in the next five years.
The Shanghai Composite Index fell 0.7 percent to 2,515.86, the lowest since July 19, 2010, when the index sank to 2,475.42.
China's money-market rate yesterday climbed to its highest level in three weeks in Shanghai, raising concerns that China will raise the interest rate again.
The seven-day repurchase rate, a gauge of funding availability in the financial system, jumped to 4.97 percent during the morning, according to the Shanghai Interbank Offered Rate website. The month's low was 3 percent.
In a note yesterday, investment bank China International Capital Corp said: "Investors are still jittery about China's stance on macro-economy policies, coupled with lingering pessimistic expectations for the US and Europe. The A-share market is likely to continue its violent swing in a short term."
The bank suggested investors take defensive positions in, for example, consumer and pharmaceutical plays.
Cement makers and banks led declines - there were media reports that cement prices in east China slipped unexpectedly last month, while a former vice governor of the People's Bank of China warned that Chinese banks face substantial stresses in the wake of the Basel III accord.
The Industrial and Commercial Bank of China, the country's largest lender, lost 1.2 percent to 4.08 yuan (US$0.64). Anhui Conch Cement, China's biggest cement maker, shed 5 percent to 21.75 yuan.
Wu Xiaoling, a former vice governor of China's central bank, warned that structurally important banks will face a financing gap of 400 billion yuan to 500 billion yuan in the next five years.
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