Stocks sink 1.5% after broad sell-off
By Lydia Chen |
June 17, 2011, Friday
|
Print Edition
Print Edition
SHANGHAI'S key stock index sank to its lowest level in almost nine months, weighed down by a broad sell-off amid concerns over the country's economic growth and monetary tightening.
The Shanghai Composite Index shed 1.5 percent to 2,664.28, the lowest close since September 30, when it closed at 2,655.66.
Many analysts are suggesting investors step aside as there may be further declines due to high inflation, which may mean the People's Bank of China will introduce further monetary tightening measures.
Market players expressed concern about a potential interest rate rise this month following a bank reserve rate hike announced this week as the yield on the central bank's three-month bills unexpectedly rose about 8 basis points at auction yesterday.
Meanwhile, China's money market rate continued to surge yesterday after Wednesday's climb of 206 basis points, the biggest increase since February 21.
The seven-day repurchase rate, which measures interbank funding availability, jumped 41.75 basis points to 6.6 percent, indicating a worsening cash shortage in the financial system.
Hou Zhenhai, vice general manager of China International Capital Corp, said that based on previous experience, the market will only see a change from bear to bull when price-to-earnings ratios fall below 20 times for IPOs.
Huang Haizhou, chief strategist of CICC, added they expect a further 10 percent fall before a rebound sometime in July or August.
The Shanghai Composite Index shed 1.5 percent to 2,664.28, the lowest close since September 30, when it closed at 2,655.66.
Many analysts are suggesting investors step aside as there may be further declines due to high inflation, which may mean the People's Bank of China will introduce further monetary tightening measures.
Market players expressed concern about a potential interest rate rise this month following a bank reserve rate hike announced this week as the yield on the central bank's three-month bills unexpectedly rose about 8 basis points at auction yesterday.
Meanwhile, China's money market rate continued to surge yesterday after Wednesday's climb of 206 basis points, the biggest increase since February 21.
The seven-day repurchase rate, which measures interbank funding availability, jumped 41.75 basis points to 6.6 percent, indicating a worsening cash shortage in the financial system.
Hou Zhenhai, vice general manager of China International Capital Corp, said that based on previous experience, the market will only see a change from bear to bull when price-to-earnings ratios fall below 20 times for IPOs.
Huang Haizhou, chief strategist of CICC, added they expect a further 10 percent fall before a rebound sometime in July or August.
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