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September 27, 2016

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Stocks dive as PBOC withdraws funds

SHANGHAI stocks tumbled yesterday amid low sentiment as the central bank pulled funds from the market.

The Shanghai Composite Index dropped 1.76 percent to close at 2,980.43 points.

All industry sectors plunged with transport equipment and electronic devices falling the most. Shanghai Shenhua Holdings Co, an automobile parts seller, lost 7.54 percent to 4.54 yuan (68 US cents), while semiconductor producer Bomin Electronics Co dropped 6.58 percent to 35.90 yuan.

The market decline was intensified by the People’s Bank of China’s withdrawal of capital. Despite pumping 130 billion yuan in total yesterday in two reverse repurchase agreements, the central bank withdrew 225 billion yuan due in the previous repos, which meant 96 billion yuan evaporated from the market.

“Capital is freezing, lowering liquidity in the stock market thus pressuring profitability,” said Qu Qing, an analyst at Huachuang Securities.


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