Stocks slip over fears of slower growth
By Feng Jianmin |
August 17, 2011, Wednesday
|
Print Edition
Print Edition
SHANGHAI'S key stock index yesterday fell for the first time in five trading days on concerns that economic growth will slow and more tightening measures will be introduced.
The benchmark Shanghai Composite Index lost 0.7 percent to close at 2,608.17 points, halting a four-day, 4 percent gain.
The People's Bank of China auctioned 5 billion yuan (US$783.38 million)in one-year notes yesterday and raised the yield by 8.58 basis points to 3.584 percent. The yield was slightly higher than the benchmark one-year deposit rate of 3.5 percent, sparking concerns the central bank may increase interest rates.
"The purpose of the surprising yield increase was to increase demand for the notes," said Duan Jihua, an analyst at Guohai Securities. "But it also raised expectations of another interest rate hike."
The central bank also issued 29 billion yuan of 28-day repurchase agreements at a yield of 2.8 percent, according to a statement. A total of 89 billion yuan in notes and repurchase agreements are maturing this week.
"There was pressure to take profits after four straight days of gains," Shenyin and Wanguo Securities wrote in a report. "Concerns for slower economic growth intensified after Moody's lowered economic expectations for the US and after Germany reported a worse-than-expected gross domestic product figure."
Meanwhile, Conference Board, a New York-based research organization, said yesterday that growth in China is slowing significantly.
The economy is cooling after the government raised interest rates and the reserve requirement for banks.
The benchmark Shanghai Composite Index lost 0.7 percent to close at 2,608.17 points, halting a four-day, 4 percent gain.
The People's Bank of China auctioned 5 billion yuan (US$783.38 million)in one-year notes yesterday and raised the yield by 8.58 basis points to 3.584 percent. The yield was slightly higher than the benchmark one-year deposit rate of 3.5 percent, sparking concerns the central bank may increase interest rates.
"The purpose of the surprising yield increase was to increase demand for the notes," said Duan Jihua, an analyst at Guohai Securities. "But it also raised expectations of another interest rate hike."
The central bank also issued 29 billion yuan of 28-day repurchase agreements at a yield of 2.8 percent, according to a statement. A total of 89 billion yuan in notes and repurchase agreements are maturing this week.
"There was pressure to take profits after four straight days of gains," Shenyin and Wanguo Securities wrote in a report. "Concerns for slower economic growth intensified after Moody's lowered economic expectations for the US and after Germany reported a worse-than-expected gross domestic product figure."
Meanwhile, Conference Board, a New York-based research organization, said yesterday that growth in China is slowing significantly.
The economy is cooling after the government raised interest rates and the reserve requirement for banks.
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