Stocks fall on bearish outlook
By Lu Nengneng and Hu Xiaocen |
January 5, 2012, Thursday
|
Print Edition
Print Edition
SHANGHAI'S stock market fell the most in a half month yesterday - the first trading day of 2012 - as Premier Wen Jiabao's bearish comments on first-quarter business conditions weakened investor sentiment.
The Shanghai Composite Index slumped 1.4 percent to 2,169.39 points, the biggest loss since December 15. The benchmark tumbled 21.7 percent last year in anticipation of China's looming economic downturn.
Sun Jianbo, analyst at Galaxy Securities, said in a note that the market was highly likely to remain volatile or rally slightly in January as the upside for China's economic situation and policies was rather limited.
Premier Wen said during his recent tour in Hunan Province that enterprises across the country might experience a "relatively difficult" time this quarter in the face of financial strains and shrinking external demands, and the central government would fine-tune its monetary policies accordingly to maintain a supportive economic environment.
As part of China's non-manufacturing Purchasing Managers' Index for December, the reading of new property orders hit a three-month low of 39.3 percent, indicating a contraction. And the reading of the sector's expected activities dropped to 47.7 percent, the only time the index fell below 50 percent last year.
"Developers hold a pessimistic attitude toward the future market, which only happened in November and December of 2008 during the world's financial crisis," the China Federation of Logistics and Purchasing said in a report posted on its website.
Worries over further cash stress amid falling sales, along with of weak industrial figures this week, dragged property developers down. Gemdale Corp shed 0.6 percent to 4.92 yuan.
Financials retreated on speculation of an escalating liquidity crunch after the central bank defied expectations of another reserve requirement ratio trimming.
The Industrial and Commercial Bank of China, the country's biggest bank, slid 0.5 percent to 4.22 yuan (67 US cents). The Bank of China lost 0.34 percent to 2.91 yuan. China CITIC Bank fell 1.2 percent to 3.99 yuan.
The Shanghai Composite Index slumped 1.4 percent to 2,169.39 points, the biggest loss since December 15. The benchmark tumbled 21.7 percent last year in anticipation of China's looming economic downturn.
Sun Jianbo, analyst at Galaxy Securities, said in a note that the market was highly likely to remain volatile or rally slightly in January as the upside for China's economic situation and policies was rather limited.
Premier Wen said during his recent tour in Hunan Province that enterprises across the country might experience a "relatively difficult" time this quarter in the face of financial strains and shrinking external demands, and the central government would fine-tune its monetary policies accordingly to maintain a supportive economic environment.
As part of China's non-manufacturing Purchasing Managers' Index for December, the reading of new property orders hit a three-month low of 39.3 percent, indicating a contraction. And the reading of the sector's expected activities dropped to 47.7 percent, the only time the index fell below 50 percent last year.
"Developers hold a pessimistic attitude toward the future market, which only happened in November and December of 2008 during the world's financial crisis," the China Federation of Logistics and Purchasing said in a report posted on its website.
Worries over further cash stress amid falling sales, along with of weak industrial figures this week, dragged property developers down. Gemdale Corp shed 0.6 percent to 4.92 yuan.
Financials retreated on speculation of an escalating liquidity crunch after the central bank defied expectations of another reserve requirement ratio trimming.
The Industrial and Commercial Bank of China, the country's biggest bank, slid 0.5 percent to 4.22 yuan (67 US cents). The Bank of China lost 0.34 percent to 2.91 yuan. China CITIC Bank fell 1.2 percent to 3.99 yuan.
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