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Stocks end down amidst Asian selloff, liquidity concern
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SHANGHAI shares fell today following a wide selloff in Asian markets while concerns about a liquidity crunch reignited after lending costs rose to a more than two-week high.
The benchmark Shanghai Composite Index lost 0.62 percent to 2,072.59 points. Turnover was 89 billion yuan (US$14.6 billion) at the trading close.
The decline came amid market slumps across Asia, with Japan’s Nikkei ending at a two-month low, Hong Kong’s Hang Seng Index falling 2.2 percent while Indonesia’s Jakarta Composite shed 4.5 percent to enter bear-market territory.
“The wide selloff across Asia sparked concern that international capital is flowing out of emerging markets,” said Shenyin & Wanguo Securities.
Investors are waiting for minutes from the US Federal Reserve due on Wednesday that will give a hint on when the Fed may start to wind down its bond purchase program, which would cut demand for emerging market assets.
Rising lending costs that pointed to tighter liquidity also weighed on the market.
The seven-day repurchase rate, a gauge of funding availability in the banking system, climbed 33.6 basis points to 4.43 percent in Shanghai, the highest level since August 1, according to the National Interbank Funding Center.
Coal producers led the market decline. Shanxi Lu’an Environmental Energy Development Co slumped 3.5 percent to 13.09 yuan. China Shenhua Energy Co, the nation’s biggest coal producer, lost 1.4 percent to 16.48 yuan. Yang Quan Coal Industry (Group) Co fell 3.1 percent to 9.10 yuan.
China National Coal Association said in a report yesterday that although coal demand recovered slightly, the sector will still be crippled by overcapacity and falling prices in the second half of the year.
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