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Stocks at lowest for 14 months
By Lydia Chen |
September 6, 2011, Tuesday
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Print Edition
Print Edition
THE Shanghai stock market slumped to its lowest level in nearly 14 months yesterday after a report showed China's service sector grew at its slowest pace on record in August.
Dark clouds over the US economy, China's biggest trading partner, also restrained investors as the world's largest economy reported dismal jobs data last week, renewing fears it could slip into recession.
The Shanghai Composite Index lost 2 percent to 2,478.74 points, the lowest since July 19, 2010, when it closed at 2,475.42. Turnover hovered at only 56.4 billion yuan (US$8.83 billion), compared with more than 120 billion yuan when the index was cruising above 2,700 points in July.
Yuan Jun, an analyst at Oriental Securities, said: "Shrinking turnover indicates neither of the two sides of investors - selling or buying - wanted to participate in the market."
Previously the market was supported partly by people's expectations that inflation may start retreating, causing monetary tightening to ease, while fewer new listings may reduce pressure on liquidity, Yuan said.
"But none of these expectations actually happened, which is why investors' confidence was further dampened," he said.
Meanwhile, China's economy is showing signs of slowing under long-standing monetary tightening. A service-industry index fell to 50.6 in August from 53.5 in July, the lowest since 2005, according to HSBC and Markit Economics. A number above 50 indicates expansion.
However, China has pledged to continue monetary tightening and the central bank cautioned it would be on "high alert" for high inflation, said Ma Delun, vice governor of the People's Bank of China.
PetroChina shed 1.7 percent to 9.60 yuan, the lowest since its listing in 2007. Yanzhou Coal Mining fell 4.5 percent to 28.26 yuan. Anhui Conch Cement sank by the daily cap of 10 percent to 19.72 yuan.
The Industrial and Commercial Bank of China was down 0.5 percent to 4.08 yuan. The Bank of Communications lost 1.5 percent to 4.66 yuan.
The stock markets are likely to suffer more falls in the near future, said Yuan, who said investors should wait until the index bottoms out at around 2,300 to 2,400 points.
Dark clouds over the US economy, China's biggest trading partner, also restrained investors as the world's largest economy reported dismal jobs data last week, renewing fears it could slip into recession.
The Shanghai Composite Index lost 2 percent to 2,478.74 points, the lowest since July 19, 2010, when it closed at 2,475.42. Turnover hovered at only 56.4 billion yuan (US$8.83 billion), compared with more than 120 billion yuan when the index was cruising above 2,700 points in July.
Yuan Jun, an analyst at Oriental Securities, said: "Shrinking turnover indicates neither of the two sides of investors - selling or buying - wanted to participate in the market."
Previously the market was supported partly by people's expectations that inflation may start retreating, causing monetary tightening to ease, while fewer new listings may reduce pressure on liquidity, Yuan said.
"But none of these expectations actually happened, which is why investors' confidence was further dampened," he said.
Meanwhile, China's economy is showing signs of slowing under long-standing monetary tightening. A service-industry index fell to 50.6 in August from 53.5 in July, the lowest since 2005, according to HSBC and Markit Economics. A number above 50 indicates expansion.
However, China has pledged to continue monetary tightening and the central bank cautioned it would be on "high alert" for high inflation, said Ma Delun, vice governor of the People's Bank of China.
PetroChina shed 1.7 percent to 9.60 yuan, the lowest since its listing in 2007. Yanzhou Coal Mining fell 4.5 percent to 28.26 yuan. Anhui Conch Cement sank by the daily cap of 10 percent to 19.72 yuan.
The Industrial and Commercial Bank of China was down 0.5 percent to 4.08 yuan. The Bank of Communications lost 1.5 percent to 4.66 yuan.
The stock markets are likely to suffer more falls in the near future, said Yuan, who said investors should wait until the index bottoms out at around 2,300 to 2,400 points.
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