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Stocks plunge as investors hold back capital
By Lydia Chen |
September 22, 2011, Thursday
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Online Edition
Online Edition
SHARES in Shanghai tumbled today with financials, developers and commodities weighing on the market as investors stayed cautious over the prospects of the country's growth while the Federal Reserve also warned "significant downside risks" to the US economy.
The Shanghai Composite Index lost 2.78 percent to 2,443.06. Turnover fell to 74.8 billion yuan (US$11.74 billion) from yesterday's 88.2 billion yuan.
"There is no incentive to spur the market up right now," said Liu Kai, an analyst with Galaxy Securities. "Only if more capital is willing to come into the arena and turnover starts to expand can we see a sustained rebound," he added.
China Vanke skipped 5.21 percent to 7.46 yuan. Industrial & Commercial Bank of China was down 2.91 percent to 4 yuan. Jiangxi Copper tumbled 5.28 percent to 29.07 yuan. China Shenhua Energy Co lost 3.38 percent to 25.69 yuan. PetroChina declined 1.74 percent to 9.60 yuan.
China will levy a tax on resources based on their value and volume, according to a statement on the government's website, citing a decision from a State Council meeting presided over by Premier Wen Jiabao. The country currently imposes resource taxes on producers of oil and gas as well as coal mining companies based on volume.
Developers suffered the blows after a report by Reuters said China's top banking regulator ordered trust companies to inform it of business dealings with Greentown China Holdings Ltd. This is a sign that China was trying to restrict financing sources for developers, Credit Suisse analyst Jinsong Du wrote in a report today. Greentown's shares are traded in Hong Kong.
"Developers are really cheap bargains right now," Liu said. "But that doesn't mean they could be ideal investments. Developers are now suffering from a shrinking sales volume in their peak business season and home prices have already stopped rising in most parts of China," he said.
Concerns over the growth of the world's second largest economy skewed after a preliminary reading for the HSBC Purchasing Managers' Index showed today that China's manufacturing activities in September may contract further again due to weakening external demand.
"Everyone is now waiting to see if the government is going to ease its monetary tightening," Liu said. "This is the key that can relieve the market," he added.
Developing countries should build buffers to prevent spillover effects triggered by slow economic growth and debt woes in developed economies, the World Bank's chief economist Justin Yifu Lin said in Washington today.
The global economy has entered a new period of danger, as both sides of the Atlantic were bogged down in sagging economic growth with key economies including the United States being stripped of their top-notch credit ratings, Lin said at the World Bank's Chief Economists' Roundtable ahead of the Bank's annual meeting.
The Shanghai Composite Index lost 2.78 percent to 2,443.06. Turnover fell to 74.8 billion yuan (US$11.74 billion) from yesterday's 88.2 billion yuan.
"There is no incentive to spur the market up right now," said Liu Kai, an analyst with Galaxy Securities. "Only if more capital is willing to come into the arena and turnover starts to expand can we see a sustained rebound," he added.
China Vanke skipped 5.21 percent to 7.46 yuan. Industrial & Commercial Bank of China was down 2.91 percent to 4 yuan. Jiangxi Copper tumbled 5.28 percent to 29.07 yuan. China Shenhua Energy Co lost 3.38 percent to 25.69 yuan. PetroChina declined 1.74 percent to 9.60 yuan.
China will levy a tax on resources based on their value and volume, according to a statement on the government's website, citing a decision from a State Council meeting presided over by Premier Wen Jiabao. The country currently imposes resource taxes on producers of oil and gas as well as coal mining companies based on volume.
Developers suffered the blows after a report by Reuters said China's top banking regulator ordered trust companies to inform it of business dealings with Greentown China Holdings Ltd. This is a sign that China was trying to restrict financing sources for developers, Credit Suisse analyst Jinsong Du wrote in a report today. Greentown's shares are traded in Hong Kong.
"Developers are really cheap bargains right now," Liu said. "But that doesn't mean they could be ideal investments. Developers are now suffering from a shrinking sales volume in their peak business season and home prices have already stopped rising in most parts of China," he said.
Concerns over the growth of the world's second largest economy skewed after a preliminary reading for the HSBC Purchasing Managers' Index showed today that China's manufacturing activities in September may contract further again due to weakening external demand.
"Everyone is now waiting to see if the government is going to ease its monetary tightening," Liu said. "This is the key that can relieve the market," he added.
Developing countries should build buffers to prevent spillover effects triggered by slow economic growth and debt woes in developed economies, the World Bank's chief economist Justin Yifu Lin said in Washington today.
The global economy has entered a new period of danger, as both sides of the Atlantic were bogged down in sagging economic growth with key economies including the United States being stripped of their top-notch credit ratings, Lin said at the World Bank's Chief Economists' Roundtable ahead of the Bank's annual meeting.
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